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Dynamic Pricing for Airline Revenue Management under Passenger Mental Accounting

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  • Yusheng Hu
  • Jinlin Li
  • Lun Ran

Abstract

Mental accounting is a far-reaching concept, which is often used to explain various kinds of irrational behaviors in human decision making process. This paper investigates dynamic pricing problems for single-flight and multiple flights settings, respectively, where passengers may be affected by mental accounting. We analyze dynamic pricing problems by means of the dynamic programming method and obtain the optimal pricing strategies. Further, we analytically show that the passenger mental accounting depth has a positive effect on the flight’s expected revenue for the single flight and numerically illustrate that the passenger mental accounting depth has a positive effect on the optimal prices for the multiple flights.

Suggested Citation

  • Yusheng Hu & Jinlin Li & Lun Ran, 2015. "Dynamic Pricing for Airline Revenue Management under Passenger Mental Accounting," Mathematical Problems in Engineering, Hindawi, vol. 2015, pages 1-8, January.
    • Handle: RePEc:hin:jnlmpe:836434
    DOI: 10.1155/2015/836434
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    Cited by:

    1. Wenjie Wang & Lei Xie, 2022. "Optimal pricing of crowdsourcing logistics services with social delivery capacity," Journal of Combinatorial Optimization, Springer, vol. 43(5), pages 1447-1469, July.

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