Saving Options

To your surprise, you find out that you’ve won the lotto. Then, to your horror, you are told that you won’t be walking off with a Publishers Clearinghouse-sized check for $25,000,000. The lotto that you won is a special kind of lottery; you can only receive your money in one of two ways.

Your first choice is to collect $100 a day for the next 30 days. After 30 days, all payment of winnings stops.

Your second choice also allows you to collect prize money for only 30 days. On the first day, you will collect one cent ($0.01). On the second day, you’ll collect twice what you collected on the first (i.e., $0.02). On the third day, you’ll collect twice what you collected on the second, etc.

Which option would you opt for, and why?

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