What is it about?
Airline pricing is complex: prices go up, then go down, then they go up again. Consumers are getting smarter and smarter, and they learn to shop around. Airlines dislike these smart shoppers and often don't know how to deal with them. We show just how many of these "smart shoppers" are out there and what it means for airline pricing.
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Why is it important?
Internet web sites that help you forecast airline prices are popping up left and right, and airline managers are struggling with managing smart shoppers. What we show is that, often times, smart shoppers can be good for the airline.
Perspectives
Everyone knows that customers will often wait for airline ticket prices to go down, but nobody know how prevalent this behavior is. Using (very very) big data we show exactly how many such customers are out there and what it means for the airline pricing.
Professor Serguei Netessine
INSEAD
Read the Original
This page is a summary of: Are Consumers Strategic? Structural Estimation from the Air-Travel Industry, Management Science, September 2014, INFORMS,
DOI: 10.1287/mnsc.2013.1860.
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