Game Theory = "Game theory is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers." Game theory is mainly used in economics, political science, and psychology, as well as logic, computer science and biology.[1] Originally, it addressed zero-sum games, in which one person's gains result in losses for the other participants. Today, game theory applies to a wide range of behavioral relations, and is now an umbrella term for the science of logical decision making in humans, animals, and computers."
https://en.wikipedia.org/wiki/Game_theory
"The United Airlines Fiasco: How Game Theory Could Help"
13 April 2017 on Morning Edition of NPR
http://www.npr.org/2017/04/13/523726313/how-game-theory-relates-to-airline-booking
"It's fair to say that United did not play this game very well when the game ended with a passenger being dragged, bloodied and screaming down the aisle.
"Everything should be designed so that that just never happens," Gans says.
Airlines overall actually have already been figuring out how to bump fewer passengers from their flights, though last year it was still about 41,000 people, according to the Department of Transportation. Game theorists like Gans say there are several things the airlines could do to play the overbooked flight game much better."
Read the article. These are the ideas to apply:
"Treat the problem as a 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."
By the way, "re-accommodation" is bull shit!
"It’s time for some game theory, United Airlines edition"
by Tyler Cowen on April 12, 2017 at 1:00 am in Current Affairs, Economics, Law, Travel, Uncategorized | Permalink
http://marginalrevolution.com/marginalrevolution/2017/04/who-gets-bumped.html
" . . . the United episode gets at a more general problem with algorithms. Even if the selection of seat loser is “truly random,” it will not always look random to the outside world. The bumping of the doctor has been a huge event on Chinese social media, and how many of those Chinese are thinking that the doctor was bumped because he was Chinese. The international loss of reputation here is significant, and it damages the United States as a whole, not just United as a brand name. In essence, individual companies under-invest in perceptions of fairness, and reliance on “truly random” algorithms can make this worse rather than better. A deliberate human chooser might well have done better, if only by knowing that a public defense of the choice would have been required, and that might have nudged United back toward the full auction or some other solution. In essence, companies may be oversupplying “reliance on randomness,” not taking the collective negative externality into account. Counterintuitively, relying on algorithms can increase perceptions of unfairness, and many of the costs of unfairness come on the perceptions side, even if “the true model” is making choices using a fair process. Two other factors are worth considering. First, due to social media it will be increasingly difficult to write and enforce retail contracts with legal meanings very different from their “common sense” meanings. Maybe I’ll write a separate post on whether that will raise or lower transactions costs, but I suspect a bit of both."
By the way, if service improves, prices go up . . .
" . . . given that the stock of United tanked after the incident, now airline customer service will improve rather rapidly. In the long run of course that will translate into higher prices too, so the net effect of this shift will prove regressive. The more you complain, the more you are redistributing wealth — through the medium of preferred price-quality configurations — away from lower earners and toward the wealthy."
