Behavioral Consequences ofOverbooking Service Capacity

As a consequence of implementing revenue management systems, many service firms (e.g., airlines, hotels, carrentals) systematically overbook capacity, thus striving to maximize the revenue at one particular point in time (i.e.,one flight, one night, and one day). The academic literature has not addressed how customers behaviorally respondto overbooking experiences, such as downgrading, denied service, or upgrading. In this article, the authors use theeconometric technique of conditional difference-in-differences analysis to study the effect of such incidences oncustomer usage patterns in an airline context.[...]