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The Game Theory of Overbooking Flights

The Game Theory of Overbooking Flights

Given the deep mess that United Airlines created for itself after a passenger was dragged off a full flight last week, Delta said it could increase the incentives for “voluntary denied boarding.” Agents will now be allowed to offer up to $2,000 to entice passengers to give up their seats, significantly more than the previous limit of $800. If that doesn’t work, the agents’ supervisors can authorize payments of almost $10,000.
Delta’s aim is clear: Use the price incentive to deal with oversold flights and, thus, avoid the social-media-fueled anger that would be sure to erupt again should there be another messy involuntary “re-accommodation” (as United initially called the incident).
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