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Bid for bumps

1/14/2011

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If you are like me, you know at least one person who loves to get bumped on flights.  That traveler connives to travel on busy days, when airplanes are most likely to get over-booked, so that he or she can receive a sizeable travel voucher or free ticket in exchange for taking the next flight.

Recognizing that market exists, Delta is planning to start allowing travelers to bid for bumps. On overbooked flights, passengers would be allowed to submit the price they would be willing to accept in exchange for taking a later flight. Passengers with the lowest bids would be selected to be bumped first.

I am curious to see (and the article doesn't clarify) whether Delta will pay each passenger the voucher amount that he or she bid, or whether Delta will pay each passenger the voucher amount bid by the last passenger to be bumped. I am also curious to see how quickly information about winning bid prices gets out, and how the information affects bidding strategies of passengers.

I am also curious to see how long it will take before a flight of passengers successfully games the auction...

Sounds like a good research project for an auction theorist!
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    About Liz

    I have worked in economic policy and research in Washington, D.C. and Ghana. My husband and I recently moved to Guyana, where I am working for the Ministry of Finance. I like riding motorcycle, outdoor sports, foreign currencies, capybaras, and having opinions. 

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