Originally Posted by
STS-134
There's some interesting game theory associated with this scenario (trying to corner the market for VDBs) as well. What if you actually get ~170 people together in a group and they conspire to buy out an entire 737-900 and force the VDB price up? First of all, if one of the people has a car crash on the way to the airport and is carrying two others and all 3 of them no show, no one gets anything. So I would hope that all of them had fully refundable tickets. Second, what if one of the 170 is a defector? They all agree that they will bid $50000 to get off the plane, but this person bids $49999, and instead of sharing the profits with everyone, he pockets it. So what do the other 169 people do? Sue him? If they do that, they'd have to admit that they colluded first...
Exactly. The reason why no caps (and hence no IDB's) is the right solution, aside from the obvious angle of freedom from violence (broadly defined), is that it forces the right allocation and pricing. Say VDB gets too "expensive," then the airlines will adjust accordingly their planning and other backup alternatives. You give rational agents
any form of "out" then you are simply introducing perverse incentives that ultimately lead to, as we see, grossly unwelcome results.