|Background: Some airline websites, such as Southwest and Air Canada, provide very transparent fare options. Often the
price of a non-refundable ticket is listed right beside the cost of a refundable ticket, and customers are then left
with making a decision on whether they should pay the extra amount for a refundable ticket.
In general, refundable tickets also permit changes at no cost, whereas non-refundable tickets on some airlines can be used
for future travel, but only after paying a change fee. As of April 2016 for example, the standard change fee on many US carriers
is $200, although it continues to be $0 on Southwest.
This decision aid computes whether a risk-neutral person would purchase a non-refundable ticket or a refundable ticket given the pricing and probability options you provide. A risk-neutral person would have no preference between $50 and a 50% chance (like a coin toss) of winning $100. The calculator assumes that if you don't go on the trip but you're able to use the ticket for a future trip before it expires, then the cost of the original ticket is just the change fee.
Disclaimer: This calculator is provided for information and/or entertainment purposes only. Ultimately you have to make your own decision on which type of fare to purchase. Use of this calculator is subject to this website's terms and conditions.
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