Are We Travellers Consistently Making the Best Decision to Get Cash for Trips?

February 12, 2018

Travellers have to go through different stages of decision making when deciding the best place to get foreign cash for the next big trip. All of us would love to consider ourselves smart, consistently rational, and being capable of making the most accurate and effective decision. However, this might not necessary be the case because of all the “mental shortcuts” our brain naturally incline towards. These could prevent us from attending to important information and variables during decision making. Here, we try to illustrate how you might have been a victim of being unaware of your smart-self. 



The “Five-stages Buyer Decision Process” is a model first introduced by John Dewey (1910) and it depicts the progressive mental stages when one is considering a buying decision (See Fig.1), often involving reasoning of judgment and decision during the process. It is important to know what judgement and decision are assessed of: 1) Judgements are assessed in terms of accuracy and these are inputs to decisions. 2) Decisions are assessed in terms of effectiveness, often the monetary effectiveness. The key assumption underlying the whole study of decision behaviour is that decision-process by human is always assumed to be rational.  


However, How do we know we are making the most efficient and rational decision when we acquire foreign currency for our next trip? Let’s walkthrough the above example with the below information. (See table.2)

Whilst people often commented and recommended that small money exchangers in Myeongdong in Seoul have the best rate. Yet the “rate” itself is very difficult to get accessed to and the more readily available information for traveller is the Industrial Bank of Korea on the internet. However, most travellers still believe in such comment and reserve a significant amount, if not all, to be exchanged over there. This is a phenomena that is observed and what’s called heuristics in the cognitive psychology/behavioural economics domain. Heuristics are the “mental shortcuts” people use to make judgement and decision fast. With this particular one, it is coined “Going-with-the-consensus” (Kahneman, 2011) and is a common one that the population uses, especially in this era of social media network.  


Here are some other extra information needed to make the decision in acquiring cash, namely transportation cost and time cost. (See table.3)



Therefore, from the previous table.2 & 3, we can conclude with the above available information that exchanging in Seoul at Korean bank will give you $6115 HKD worth of South Korean Won when you pay $6000 HKD at its rate. The other options not only costs more with transportation but also time-consuming. Nevertheless, the caveat of exchanging in Seoul is that it is too ideal: Most travellers would feel the need to already have some Wons in their wallet by the time the flight landed in Korean land, therefore the costs incurred from above would have happened in any case. Moreover, changing in Seoul would limit the flexibility of the journey planning and there is also risk of missing the opening hours, or risk of no other options if the rate is found no longer competitive at spot. In short, the after-all benefit of exchanging in Korea is not as attractive as it is suggested in table.2.  


Klein (1993) argued some people make decisions by retrieving from memory a decision that was previously effective in the same or similar situation. And this is particularly useful when time or resource is limited. When trips are booked spontaneously nowadays, travellers would often stick to their previous option and mistake it as the best value option due to cognitive ease and judgement, where they fail to accurately calculate the sum but rely instead on unreliable intuitive thoughts that are easily accessible in the head (Kahneman, 2011), even though it might not be the best option again providing the rates might have changed, the circumstances have changed. This is definitely one place travellers should be aware and not forget to pay attention to when considering the most effective decision to acquire foreign cash.


Pecutus is building a collaborative ecosystem for millennials to help each other with their travel money needs. We and the community are here to support and cover your behavioural blind-spots.




Dewey, J. (1910). How we think. Boston: Heath.


Kahneman, D. (2011). Thinking, fast and slow. Macmillan.


Klein, G. A., Orasanu, J. E., Calderwood, R. E., & Zsambok, C. E. (1993). Decision making in action: Models and methods. In This book is an outcome of a workshop held in Dayton, OH, Sep 25–27, 1989.. Ablex Publishing.


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