Economics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 2

Alda is willing to pay $2,000 to visit her favorite cousin over spring break. A month ago, she booked a trip costing $1,200. Spring break has arrived, but Alda needs one day to finish an important paper before she goes. Alda could cancel her trip and get a refund of $800. Or, she could pay an additional $1,000 (on top of the $1,200 she already paid) to rebook the trip for two days later. Explain what Alda should do.