Toward Choice-Based Revenue Management

Professor Garret Van Ryzin

ABSTRACT

Using consumer choice models as a basis for revenue management (RM) is appealing on many levels. Choice models can naturally model important buy-up and diversion phenomenon and can be applied to newer, undifferentiated low-fare structures and dynamic pricing problems. Yet despite its potential, choice-based RM is a significant departure from current practice and the task of revamping RM technology to incorporate choice models has been a challenging prospect. However, recent research advances have now brought choice-based RM within striking distance of being practical. In this talk, we survey the recent research results in this area and discuss their implications for RM research and practice.