A Behavioral Study of Capacity Allocation in Revenue Management
5.12.2017 16:00
YER : AB1, 1001
In this paper, we present a set of laboratory experiments that investigate how human subjects solve the two-class capacity allocation revenue management problem. The two-class problem is a basic revenue management problem and it is a fundamental building block for more sophisticated problems. We study the capacity allocation problem with ordered and unordered arrivals, as well as a simplified version of the problem in which the decision-maker makes a single capacity allocation decision up-front. We find that our laboratory participants generally accept too many low-type customers, leave too few units of unused capacity, and as a result serve too few high-type customers. We also find that making decisions up-front improves performance in the ordered arrivals case, and does not hurt performance in the unordered arrivals case. Lastly, we propose a behavioral choice model which incorporates the participants’ regret feelings and organizes our experimental data well.

Bahriye Cesaret
Assistant Professor at the Faculty of Business, Özyeğin University 

Bahriye Cesaret is an Assistant Professor at the Faculty of Business at Özyeğin University. She received her B.S. in Industrial Engineering (2008) from Istanbul Technical University, and M.S. in Industrial Engineering (2010) from Koç University. In 2010, she joined the Ph.D. program in Management Science at the University of Texas at Dallas (UTD). During her pursuit of Ph.D., she earned an M.B.A. (2013) and an M.S. degree in Supply Chain Management (2013) from UTD. She completed her Ph.D. in Management Science (with a concentration in Operations Management) in 2015. She received an ‘Outstanding Student Teacher Award’ from the Naveen Jindal School of Management for the academic year 2013-2014. Her current research lies in the domain of Behavioral Operations Management —a research stream which aims to investigate the interaction of human behavior and operational systems and processes—focusing on (i) pricing & revenue management, and (ii) supply chain management.