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You are deciding between two different airlines for an upcoming trip. Airline 1 will cost you $300 round trip. Airline 2 will cost you $400
- You are deciding between two different airlines for an upcoming trip. Airline 1 will cost you $300 round trip. Airline 2 will cost you $400 for the same trip. Airline 1 has a terrible track record though when it comes to on time flights. There is a 80% chance that your flight will be delayed on Airline 1 and it will cost you another $200 to rebook your flight to a different one. There is only 10% chance Airline 2 will have a major delay, but they have a more stringent rebooking policy and it will cost you $400 to rebook.
- Draw the decision tree (3 points)
- What is the total cost of Airline 1? (3 points)
- What is the total cost of Airline 2? (3 points)
- Which Airline should you choose and why? (3 points)
- What is the downside of this decision tree? (3 points)
- If $700 is your absolute most you are willing to spend on a flight does this change your decision? Explain. (2 points)
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