Aly and Jake, two college students in Wisconsin are planning on going on a vacation after their finals to celebrate

the hard work they had put in over the long and demanding semester. They have a cruise booked on Carnival Cruise Lines Fascination ship. The ship is planning to leave out of the Port of Miami on May 21st at 3:00PM and is planning to dock back in the Port of Miami at 7:30AM May 25th. During the duration of the cruise, the ship will stop in Key West and Calica, Mexico. The cost of the cruise is $400 per person. Aly and Jake had thought of driving for the sake of an adventurous drive across the nation, however; both being college students, money is an important factor and they both have the intentions of minimizing their costs. With every vacation there is an uncertainty of when one will arrive to their destination due to uncontrollable factors. If Aly and Jake were to miss their ship, they would be forced to forfeit their cruise vacation costing them the price of the cruise itself. Therefore, time is a factor as well. After clearing some time out of their timely schedules, Aly and Jake calculated the cost of driving to Miami from La Crosse Wisconsin assuming that if they drove, they would drive straight through without spending any nights in a hotel. Between the miles from La Crosse to Miami and the miles per gallon of the Volkswagen, Jetta that they would drive and the unforgivable prices of gas, it was determined that the cost of driving from La Crosse, Wisconsin to Miami, Florida would be $480 round trip. With past experiences with traffic in Chicago, Atlanta and Orlando, it was determined that there is a .2 chance that they will not make it to the cruise on time. Therefore there is a .8 chance that they will make the cruise on time. The low cost potential of driving is appealing to Aly and Jake.

There is an alternative that would 100% guarantee that Aly and Jake would make it to the cruise ship on time. This alternative is to fly from La Crosse to Miami International Airport; however, the cost of flying is $340 per person, naturally the higher cost is less appealing to Aly and Jake. Meanwhile, Jake had found that a travel agent by the name of Agent Treats from Valley Travel Agency could help him and Aly seek perfect information by analyzing their data to determine the outcomes concerning being on time for the cruise and being late for the cruise. They are unsure of how much she charges to analyze the data however through their calculations Aly and Jake were able to determine that the value of hiring her is $120. Aly and Jake discussed it and decided that if the cost of Agent Treats is less than $120, they would hire her. Expected Value of Perfect Information:

Result from Travel Agent Will Make Cruise Will Miss Cruise

Probability .8 .2

Type of Transportation Car Airplane

Cost $480 $680

Probability * Cost $384 $136

Expected Cost with Perfect Information $384 + $136 = $520 Best Expected Cost without Perfect Information = $640 EV of Hiring Travel Agent with Perfect Information $640 - $520 = $120 A week went by and Aly and Jake had gotten a phone call from Valley Travel Agency letting them know that the cost for Agent Treats to analyze their data was $100 which is $20 less than what Aly and Jake determined she was worth; however, they were soon told that her results may contain errors. She said that with their probability of being on time that she can only say with .85 confidence that Aly and Jake will actually be on time for the cruise. Meaning she is .15 confident that they will actually be late. With the probability of being late she can only say with confidence that the probability of Aly and Jake being on time for the cruise is only .1 and the probability of them being late is .9. After this new information was delivered to Aly and Jake they sat down and did some more calculations to determine the new value of hiring Agent Treats with imperfect information. They soon determined that the value of hiring her had dropped. The expected value of hiring Agent Treats with imperfect information is $83.20.

Expected Value of Imperfect Information:

Cost of Not Hiring Travel Agent = $640 Cost of Hiring Travel Agent with Imperfect Information = $556.80 EV of Hiring Travel Agent with Imperfect Information $640 - $556.80 = $83.20

It soon came time for Aly and Jake to make a decision before the cost of airline tickets went up. Their decision was to determine whether or not to hire Agent Treats or go with the instinct of their own calculated probabilities to help them determine whether to drive or fly to Miami. Since the cost of hiring Agent Treats was more than the value of hiring her, Aly and Jake decided to go upon using the instinct of their own calculated probabilities to make their decision. Since the expected value of flying to Miami was a cost of $680 and the expected value of driving to Miami was a cost of $640, they decided to take the risk of driving because of the low cost potential and their idea of an adventurous drive across the nation. Soon enough finals were taken and May 19th rolled around. Aly and Jake packed up the Volkswagen Jetta and left La Crosse for Miami, Florida. The drive there was an adventurous one like they had expected. They arrived in Port of Miami with three hours to spare before the Fascination Cruise Ship boarded to sail. The next five days were spent carelessly lounging in the tropics.