Why Do People Let Domain Names Expire?

Anyone who has ever owned a domain name has faced the question: should I spend the $7 to renew a domain or not. You bought it a year ago, you planned to build a web site on it, and now a year has come and gone and not much has changed. You could buy a couple of lattes, or you could renew that domain name, hoping that in the next year you will find the time to do what you didn't in the last year.

My question is: when do you renew, and when do you let it go?

If you let it go, that means you have no chance of participating in the value capture of the domain name. If you renew, then for a relatively small amount of money, you buy an option to do something with the domain. It might increase in value and you could sell it for a profit; or, you might find the time to do something with the domain.

(Conversely, one could argue that letting it go is the smarter decision because the money you spent so far, as they tell us in b-school, is a sunk cost -- there's nothing you can do about it.)