The United Airlines Fiasco: How Game Theory Could Help The fiasco with United dragging a passenger off its plane illustrates the problem of enticing people to voluntarily give up their seats. We talk to game theorists about some options.
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The United Airlines Fiasco: How Game Theory Could Help

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The United Airlines Fiasco: How Game Theory Could Help

The United Airlines Fiasco: How Game Theory Could Help

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DAVID GREENE, HOST:

So United Airlines says it will never again use police to forcibly remove passengers from over-full flights. But this week's fiasco for United highlights a problem that airlines face every day, it's how to entice people to give up their seats voluntarily. NPR's Chris Arnold has been talking to people who study what is called game theory. And they think the industry could be doing a much better job.

CHRIS ARNOLD, BYLINE: You've got a hundred seats on an airplane but you've sold 105 tickets and everybody actually showed up to fly on the plane. It's a problem. But it's actually also a game if you look at it that way.

JOSHUA GANS: Yeah, this is exactly a game theory-type problem.

ARNOLD: Joshua Gans is a professor of strategic management at the University of Toronto.

GANS: The airline wants some people off the plane. Every single person on the plane wants to stay on.

ARNOLD: I guess it's fair to say that United Airlines, in this most recent case, did not play this game very well.

GANS: Yes, absolutely. I mean, it just - everything should be designed so that that just never happens.

ARNOLD: We should say that airlines overall are getting better at this. Fewer travelers are involuntarily bumped from their flights by the airlines, though last year it was still about 41,000 people. And game theory experts say that there are several things the airlines could do to play the overbooked flight game much better. Number one, don't let passengers board the plane and then try to take their seats away.

KEVIN ZOLLMAN: You tend to value something more once you have it.

ARNOLD: Kevin Zollman is a philosophy professor at Carnegie Mellon who studies game theory. And he says this is called the endowment effect. And there are studies that show that if I ask you how much you'd pay for, say, a coffee mug, you might say five bucks.

But if I give you the coffee mug and then I say hey, I want that coffee mug, how much will you sell it to me for, you're probably going to say something more like 10 bucks - same thing with airplane seats.

ZOLLMAN: Once the people got on the plane and sat down, now that's my seat. I'm sitting in it. And so then to ask me to give up my seat would require more.

ARNOLD: So when airlines offer passengers, say, $800 to give up their seat, that's going to work a lot better in the airport terminal. And if passengers are sitting on the plane, the airline should know that it needs to offer a lot more money. OK. Number two, Zollman says don't make the offer in such a public way. He says most airlines...

ZOLLMAN: They make this big announcement where they say would anybody be willing to give up your seat for $400? The problem there is humans are really sensitive to being suckers.

ARNOLD: And Zollman says there are some people who would be willing to give up their seat for a $400 ticket voucher, but...

ZOLLMAN: Everyone looks around and everyone sees, well, nobody else is doing it, so I must be a sucker if I do it. So I'm not going to do it, either.

ARNOLD: Analysts say Delta is one airline that's starting to ask passengers when they check in whether they'd give up their seat, sometimes asking them how much they would want in exchange. Zollman says that's a much better approach. And technology could help. Everybody has a cellphone. We get text messages telling us if our flight's delayed.

ZOLLMAN: Text message would be a really good way to do this.

ARNOLD: Actually, an analyst we talked to said at least one airline is trying this with text messages. And Zollman says airlines could get a lot more passengers in on the game and willing to play if they started with a high number and worked their way down from there. He says if an airline texted him and offered him $2,000 to give up his seat, if he didn't really need to get to where he was going on time, he'd say yes.

ZOLLMAN: So now I'm engaged in the process. Hopefully I'm going to win it at $2,000. Too many people took the deal, so now they're bumping it down to 1,500. Well, that's still pretty good. I'll still take that. And so by getting people engaged in the process and active from the beginning, I think that would go a long way to making people feel like now it's a competition or a game.

ARNOLD: And that would give the airlines a key piece of information. People who won't even consider a lot of money, they might really need to get to where they're going - a job interview or their best friend's wedding or to be with a sick parent in the hospital. Even if the person doesn't scream and get dragged off bleeding, those are probably people you don't want to bump if you can help it. Chris Arnold, NPR News.

(SOUNDBITE OF EVIL NEEDLE'S "VIBIN")

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