I attended a talk by an economist, and he gave the following explanation of how things worked. The assumption is: the value of a seat goes to 0 at the instant a

I attended a talk by an economist, and he gave the following explanation of how things worked. The assumption is: the value of a seat goes to 0 at the instant a plane takes off. For a given number of seats available, you can plot a price (Y axis) -vs- time left (X axis) curve. This curve will gently slope down and hit 0 when t=0. Now you can plot a whole series of such curves, one for each N (where N = number of seats available). As N goes lower, the curves are higher. If you're at a certain point in the curve for a particular N, if a seat gets sold, then you can jump up to the curve for N-1 . Obviously, the airlines' systems aren't fast enough to do this in realtime; so they do this adjustment in batches (every Monday and Wednesday?). Anyways: this was what he claimed was going on. I'm not sure how correct the above is.