3 ms·
I didn't say they were underpriced. An auction doesn't solve for accurate price without significant demand, which they didn't have. (The Hoover example elsewher
by basseq 11y ago
I didn't say they were underpriced. An auction doesn't solve for accurate price without significant demand, which they didn't have. (The Hoover example elsewhere in this thread is counterfactual example.)
Note also that even though AA estimated that the passes (for certain individuals) "were costing it millions of dollars in revenue", no one bought one for $3M in 2004. The value of an unlimited pass is directly tied to how much you'd use it. A handful of individuals were at the far end of the bell curve.
- danieltillett 11y agoA Dutch auction [1] would be the way I would auction of these passes. This way you find out the top price that the people on the far end of the bell curve think the pass is worth. 1.https://en.wikipedia.org/wiki/Dutch_auction https://en.wikipedia.org/wiki/Dutch_auction
- basseq 11y agoDutch auctions work with one item (or multiple items where a single buyer would want n items of a limited supply: see eBay). That still wouldn't solve the problem in this case: remember, they didn't run out of passes. They sold every one they could at the offering price. Where there are multiple buyers, no rational buyer is going to look to pay a premium.