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Getting the Cheapest Ride

I’m trying to decide what to do about train travel during our 5-month sabbatical in Germany.

For $55 I can buy a card that gives me a 25 percent discount on all train tickets I buy. So if I buy $220 worth of train tickets I break even — any more than that is a good deal.

I have to trade off this fixed cost against the savings in the face of uncertainty about how many tickets I’ll be buying and the likelihood that much of my train travel expenses will in any case be reimbursed by universities that invite me to lecture.

These are considerations that confront people every time they have the possibility of paying a fixed fee for the option of a lower price on some set of goods or services. Rationally we should make this calculation very carefully, as our simple economic theory suggests.

In my case, however, I just don’t want to be bothered with worrying about it, so I’m going to buy the train card and know that henceforth I’ll be getting the cheaper price. But — I’m not so interested in saving money that I’m willing to buy the more expensive train card that gives me a 50 percent discount!


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