You go to a Dave and Busters, Round 1, or similar arcade where the games spit out tickets redeemable for prizes.
You can teach your child how the arcade is effectively selling tickets for a high price when you buy-in and then buying them back cheaply by exchanging prizes for them at prices that “devalue” the tickets.
- The average game earns 20 tickets and costs $2 to play
Start with $100
Prize Menu (these were real prizes I found in D&Bs):
- How many tickets per $1 do you get when you play (ie earn)?
- How about when you cash out? The real-world value of the prizes determines the exchange rate you are basically selling the tickets back to the arcade at.
- Note: kids need to find out what each item’s real world value is to do this correctly. So they get practice using internet search to get info.
- Do different prizes have different exchange rates?
Extending the lesson
[You could extend this to a business lesson by explaining the arcade’s fixed costs (rent, game machines, build-out) and variable costs (prizes, labor) and how the customer traffic bridges the payback.]