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One Item, Two Prices: How the Endowment Effect Can Explain Different Valuations of the Same Object

April 17th, 2017 No comments

If you are not aware of the United Airlines disaster/debacle/controversy/blunder (take

Figure 1: United Airlines aircraft

your pick), I would highly recommend familiarizing yourself. However, to save you some time, I will provide you with a short recap of what happened. On April 11, 2017 United Airlines had over booked a flight from Chicago to Louisville and needed to make room for four members of the flight crew. You can probably guess where this is going –  an overbooked flight with four additional seats needed means that four passengers have to change to a later flight (math!). No one wanted to volunteer to give up their seat, so United Airlines bumped four passengers who were already seated from this flight. For whatever reason, one man really did not want to give up his seat that he had already paid for. Thus, United Airlines underwent an “involuntary de-boarding situation” and thought that it would be a good idea to physically remove this man while he was kicking and screaming. Fortunately for us, and unfortunately for United Airlines, this incident was caught by many people on video and then posted to social media. If you’re curious about what United Airlines missed and how they could have potentially avoided the bad PR they incurred after the event, you should continue reading.
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