Game Theory in Flight Overbooking
http://www.npr.org/2017/04/13/523726313/how-game-theory-relates-to-airline-booking
Most of us know what happened this April when a video of United Airlines security dragging a bloodied and beaten passenger off the plane went viral. Could United Airlines have used a better method to deal with this situation?
The article above talks about how overbooking is like playing a game. United Airlines did not play this game very well since it resulted in the incident mentioned above. Airline companies almost always overbook for a flight since they assume some passengers will not show up. However, if everyone shows up, they have a problem. The article mentions several methods United Airlines could have taken to beat the overbooked flight game.
- Don’t let passengers board the plane and then take their seats away. And if you do, offer them a lot more money.
- Don’t make the offer in such a public way, because nobody wants to be a sucker.
- Make better use of technology and start with a big offer.
- Use the information you get from the game to make better choices about who you bump off a flight.
When someone has already sat down and put their luggage in the overhead compartment, they will not want to get off anymore. People tend to value something more if they have it. If you need to bump someone after, you better have a huge incentive for it.
If you make a big announcement about it, people will not feel like doing it since nobody around them is doing it. It would be better to ask passengers as they check in and asking how much compensation they want.
If we get texts when our flight is delayed, why not text customers asking if they would like to give up their seat for a initial high price. This would also give away information on which customers they should not bump off a flight. If they are not willing to consider a lot of money in exchange, then those are the people that really have to get somewhere.
This article relates some of the basic concepts of game theory we discussed in class. One side is the customer and the other is the airline company. If we look at this like a simple example of a game theory model, United Airlines would have a few options (mentioned above) to take and they are playing a game with the passengers on whether they need to be where they are going on time. We know that the way the passenger is most likely to behave is to remain on the flight. However, if they are not in a rush and found out they can earn a few hundred extra bucks, then why not. If United Airlines uses the 3rd option above and texts passengers with a huge offer then maybe people might be more willingly to take the voucher. If it is still overbooked, then use the information obtained to see who would not be willing to miss their flight and avoid them. The goal for United Airlines is to free as many seats as needed without having to force someone who is unwilling to get off. Passengers either need to get to their destination in time or they don’t. If United Airlines offers vouchers to the right people at the right time, then they would be more likely to win the overbooked flight game than not doing anything until the last few minutes.