If Dan and Emily decide to install an in-ground pool in their back yard, what principle applies to this decision regarding recouping costs?

The principle that applies to Dan and Emily's decision to install an in-ground pool in their backyard, particularly in relation to recouping costs, is Contribution. This principle suggests that the value added to a property by a certain improvement or addition is directly related to the cost of that improvement, but it also considers the overall enhancements to the property.

In the case of installing a pool, the Contribution principle implies that while the pool may increase the property's value, the actual increase may not equal the entire cost of installation due to various factors such as market conditions, other amenities surrounding the property, and buyer preferences in their area. Essentially, the pool contributes to the overall value of the property but may not fully recoup all expenses, reflecting a significant aspect of real estate value determination.

Understanding Contribution allows homeowners to make informed decisions about home improvements, as it highlights the investment's potential impact on property value compared to its cost, ensuring that they are realistic about their expectations for recouping those costs should they decide to sell the property in the future.