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The customer valuations game as a basis for revenue management

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Abstract

I describe the customer valuations game, a simple intuitive game that can serve as a foundation for teaching revenue management. The game requires little or no preparation, props or software, takes around two hours (and hence can be finished in one session), and illustrates the formation of classical (airline and hotel) revenue management mechanisms such as advanced purchase discounts, booking limits and fixed multiple prices. I normally use the game as a base to introduce RM and to develop RM forecasting and optimization concepts off it. The game is particularly suited for non-technical audiences.

Suggested Citation

  • Kalyan Talluri, 2008. "The customer valuations game as a basis for revenue management," Economics Working Papers 1140, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:1140
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    Keywords

    Revenue management; teaching; valuations;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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