## Thursday, February 18, 2010

### Camp Dilemma

Here, on the North East of the US we have a winter school-break that many use to escape to warmer places. Or, on the opposite, to live the winter to the fullest, and go skiing, tubing or skating. For those of us who finished all the vacation days during the Holiday break, there is TV babysitting or kids' vacation camps. A week of vacation camp costs \$250, if you pay on or before the first day of the camp. If you choose to go and pay day-by-day, it is \$60 per day. Can you help me figure out whether to sign my daughter for the whole week or on a day-by-day basis? Our past camp experience shows that she will definitely enjoy four days, but she frequently gets tired and refuses to go on the fifth. Let's say that we are only 50% certain that she will stay for 5 days.

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Kim said...

Pay upfront, cost = \$250

Pay as you go, cost = \$240 for the four days, plus if you go the fifth day, then it's \$300. If she decides she doesn't want to go the fifth day, then it's only \$240.

So vs. paying upfront, you save \$10 if she goes 4 days, you lose \$50 if she goes the fifth day.

Since you think there's a 50-50 chance she'll want to go the fifth day, the savings of the upfront payment outweigh the loss if she doesn't want to go the fifth day.

Pay upfront.

(Of course, you should also weigh the chance she might get sick and miss all five days)

Maria said...

I agree with Kim.
If the child does not have any cold symptoms, it make more sense to pay upfront \$250.
When paying upfront, the worst case scenario: lose \$10 if child ends up not going on the fifth day. When paying day-by-day, worst case scenario is loosing \$50 if the child attends all five days. Chances of both events are equal. So, choosing less damaging scenario.