On: Southwest to Stop Overbooking as United Uproar Ech...

[loeg]

Why cap at $10,000? There needn't be any cap.

[pdelbarba → loeg]

If it gets really high, I imagine passengers would do their best to drive it up. Would you volunteer if the offer was $2k out of a $100k vs a $10k pool? It defies classic game theory to an extent, but humans like to roll the dice.

[rlanday → pdelbarba]

You're going to collude with ~100 random strangers to prevent anyone else from taking the offer until it gets to the level you want it to get to, and then agree to split it somehow? Ha ha ha.

[dawnerd → rlanday]

Last year when I was flying back from LIH this happened but on a very small scale. These two guys both were joking about just driving the price up and so they did, all the way to the max Guy got a free hotel stay and food as well since there was only one flight per day to LAX.

[SilasX → rlanday]

At a high enough price, you encourage exactly those conspiracies.

[landryraccoon → SilasX]

I'd defect. The first person to defect wins the entire pool. It's not like any agreement among the passengers would be enforceable.

[loeg → SilasX]

That isn't how game theory works. Colluding with 100 people becomes harder the reward for defection grows higher.

[SilasX → loeg]

And so does the incentive to try shenanigans that break the simple model of the game.

[loeg → SilasX]

There's nothing to suggest the model is overly simplistic. Good luck convincing 100+ people to collude on those shenanigans at their own personal loss.

[SilasX → loeg]

If your model says that 100 people never stick to an agreement, then yes, it is too simplistic.

[loeg → pdelbarba]

Someone will eventually defect, probably far lower than $10k. If it becomes a very high cost for airlines, they will simply price that externality into their calculation for double booking.