Yield Management - Experimental Studies of Yield Management Decisions

Experimental Studies of Yield Management Decisions

Recently, people working in the area of Behavioral operations research have begun to study the yield management decisions of actual human decision makers. One question that this research addresses is how much might revenues increase if managers relied on yield management systems rather than their own judgment when making pricing decisions. Using methods from experimental economics, this work has revealed that yield management systems are likely to increase revenues significantly. Further, this research reveals that "errors" in yield management decisions tend to be quite systematic. For instance, Bearden, Murphy, and Rapoport showed that with respect to expected revenue maximizing policies, people tend to price too high when they have high levels of inventory and too low when their inventory levels are low.

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