Scientific Research Study Analyzes When To Buy Airline And Theater Tickets

There should be an image here!Do you fancy watching a musical in London? Then, according to a research study at the Universidad Carlos III de Madrid (UC3M) if you want to save money you should buy your airlines long in advance, but postpone the purchase of your theater ticket until the last minute.

Why do airline tickets become more expensive as the travel date approaches whereas theater tickets are sold at half price in Leicester Square on the day of the performance? In their recent article published in the Economic Journal, (Advance Purchase Discounts versus Clearance Sales), Professors Marc Möller and Makoto Watanabe from the UC3M Department of Economics have considered the pricing of products that can be purchased in advance, i.e., long before their actual date of consumption. Further examples include seasonal products like the newest skiing equipment or entry slots for marathons.

According to the study, there are two determining factors for optimal planning for prices. On the one hand, when purchasing early, consumers face uncertainty with respect to their own future demands. “When we reserve our flight to London weeks ahead we have to take into account the possibility that unforeseen circumstances could keep us from traveling to London”, the study’s authors explained. “In order to make consumers take their chances, airlines have to offer advance purchase discounts. As a consequence ticket prices increase as the travel date approaches,” they added.

On the other hand, when purchasing late, consumers face the risk of becoming rationed. When we purchase our theater ticket last minute, there exists the possibility that the event has sold out. In order to make consumers bear this risk, theaters implement a clearance sale by offering last minute discounts. As a consequence ticket prices decrease on the day of the performance

The optimal dynamic pricing strategy depends on the interplay between individual demand uncertainty and rationing risks. In turn, rationing risks depend on a comparison of demand and supply and hence on the seller’s capacity. Differences in dynamic pricing can therefore be explained by differences in capacities. Marc Möller and Makoto Watanabe show that advance purchase discounts will be employed by sellers whose capacity is relatively small in comparison to demand whereas Clearance Sales are optimal when capacities are large. Hence differences in the pricing of airline and theater tickets can be explained by the fact that air travel to London is a relatively tight market while the long running musicals of London’s West End are very unlikely to become sold out.

The article shows further that clearance sales are more likely and advance purchase discounts are less likely to be observed in markets where prices can be committed to in advance, temporal capacity limits are difficult to implement, and resale is feasible. These results provide further reason for the observed differences in pricing.

In addition, in his ongoing research Makoto Watanabe has found evidence which shows that air fares are lowest around eight weeks before the travel date. Moreover, it seems as if tickets are cheaper when purchased in the afternoons, rather than the mornings. Do airlines price discriminate between business travelers who book their tickets at work and leisure travelers who book from home? This claim still has to be confirmed in future research.

[Photo above by mynameisharsha / CC BY-ND 2.0]

Ana Herrera @ Carlos III University of Madrid

[awsbullet:savvy travel]

How To Be Geeky On A Shoestring Budget

There should be an image here!Like many college students, I don’t have much money. However, I do have plenty of geeky toys. I learned very early on to make do with what I had, but that didn’t mean that I had to suffer and do without. Here’s how I achieved my current geek setup without going over budget.

Arguably, one of the most important components to any geek setup is a good desk. However, you do not need to save money by buying a little hutch. All you need is a little ingenuity. I bought two $30 desks from Walmart and placed them together to achieve a $60 L-shaped desk.

There should be an image here!

As you can see, I have three computers, so I needed the space that an L-shaped desk provides. How did I afford three computers on a low budget?

First off, the laptop on the left is a loaner. The MSI Wind netbook in the center was only around $250. I bought my Dell Inspiron on the right when I got my first student loans. Even so, I only paid around $600 for it. The big monitor that it’s running on is actually a Polaroid 19″ HDTV. Since it has all sorts of hookups on the back including VGA, I’ve saved money by not buying a television and a monitor. I both work and entertain myself at my desk. You can get a similar HDTV for around $250 these days.

One thing that is not shown in the picture is my iPod touch. 8GB models are now $199. I cannot afford cell phone service, so I text with Google Voice on my iPod touch wherever I can find a Wi-Fi hotspot.

So with a bit of time and ingenuity, I’ve achieved a great geek setup.

Are you a geek on a budget? If so, how did you achieve your current setup?

Daniel W. Webb has been self-publishing content on the Internet for over a decade. He’s written articles for a tech oriented site as well as contributed to an anthology book. He is currently majoring in communications and will soon minor in technology.

Grocery Shoppers Who Try Harder To Track Costs Do Worse

There should be an image here!Almost one in three U.S. households shop on a budget — and one in six can only afford basic necessities. So it’s no wonder that 78 percent of budget shoppers — twice as many as those who shop without a budget (37 percent) — try to track how much their groceries are likely to cost as they roll through the aisles.

But the harder they try, the worse they do — overspending by as much as 19 percent, according to a new study, which was conducted by a Cornell professor and colleagues and is published in this month’s Journal of Marketing.

In general, the researchers found that all consumers tend to underestimate how much their groceries are going to cost.

“But those who try to calculate the exact total price almost always do worse than those who just estimate approximate prices,” said Brian Wansink, Cornell’s John S. Dyson Professor of Marketing, who co-authored the series of studies with Koert van Ittersum of the Georgia Institute of Technology and Joost M.E. Pennings of Maastricht University, the Netherlands. Their work included two field studies and two laboratory studies.

It is low-income shoppers who try most to calculate, rather than estimate, Wansink said.

That means that those on the tightest budgets — those most motivated to track their spending — may be at greatest risk for spending more than their budget allows, said Wansink, forcing them to cut back in other areas, which “could cause shoppers unexpected financial distress.” This chain of events can also cause these shoppers to develop negative feelings toward the store they patronize because they spent more than they planned.

The researchers also found that the most accurate shoppers based their estimates on the dominant range of price endings in their baskets — such as the 99 cents in $4.99. In other words, if the price endings of most of the grocers are between $.50 and $.99, people rounded up to the nearest dollar. “When people don’t round up, it leads to some unpleasant surprises at the cash register,” said van Ittersum.

Wansink suggests that the retailers might help consumers estimate the cost of their groceries with cart scanners, by changing their price-setting strategies or by providing shopper trainings in the principles of decision making, statistics, and mental computation.

In the meantime, the researchers offer these tips:

Round each item to the nearest dollar — $2.25 becomes $2 and $5.50 becomes $6.

If you lose track, estimate the total number of items, then guess the price of the average item and multiply them together.

If you really want to calculate the exact total price, use a calculator.

Tom Rushmer @ Cornell Food and Brand Lab

[Photo above by Fabio Venni / CC BY-ND 2.0]

[awsbullet:Bob Barker Price is Right]

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If you’re like me, then you probably have some stuff that you don’t really need. No matter how hard I try, random objects just seem to keep piling up, and while I’m usually the type of person that hates to accumulate a bunch of junk, I’ve found it hard to keep up with the amount of stuff that’s coming into the house. In your circle of friends, you probably know of people who have things that you want, and in return, they may want some of the stuff that you’re looking to get rid of. Have you ever thought of proposing the idea of swapping items? I’ve only done this a couple of times, but it’s worked for me. If your circle of friends isn’t big enough to make a swap possible, then expand the possibilities with SwapThing.

The Web site allows you to swap, buy, and sell things, but it’s important to realize from the very beginning that SwapThing is not an auction site. Instead, it provides a way for users to connect with one another and bargain on their own terms. Registration and item listings are free, but there is a small fee of $1US for each exchange of goods. With over 3,000,000 things available, you’re sure to find something that you want.

[tags]SwapThing, Swap, Items, Buy, Sell, Bargain[/tags]

Bargain Shopping Help

In response to a recent Technobabble article on CompUSA, a Gnomie gnamed Stan sent the following tale of success. It pays to read every bit of Lockergnome:

I saw your article for the “CompUSA Midnight Madness” sale late Friday afternoon. I had been really busy at work Friday, and hadn’t had much of a chance to read any non-work related email till about quitting time. At just about 6pm, I read the article. I’m trying to get out soon, BUT I just had to go for the $29 200G Seagate and the $39 laser printer. “Maybe even the 1G USB stick and a camera… I’ll pursue the ad in the store.” When I got the CompUSA, there was a line winding maybe 150 feet out the door. I thought I could just come back later on, maybe around 10:30 or 11:00. But that’d be difficult…

Then, I saw my mother-in-law wheeling a cart towards the door – and my dad-in-law in line, just 2 or 3 places to the door! She’s waving me over. I park, and get in line with them. We talk a bit, and then we’re inside the store. It’s not a full house. No pandemonium here. I’ve been in CompUSA before and it’s usually pretty wild. Not this time! The line enters the doors, and goes up to the registers. Right there is all the big sale stuff stacked up. I told the salesman at the head of the line what I wanted, and he said to pick up a laser printer from that stack – the cashier will get the drive and USB stick for me. They had 4 or 5 cashiers open, and were moving customers in & out pretty efficiently.

The cashier had the drive & USB stick within a minute. Rang me up, and even explained the rebates. I was out of the store within 30 minutes, and home in another 10. Later the next day, I went online and learned about the laser printer, that it has no regular printer port. Also that it is a bit noisy and takes a couple of minutes after use to go into it’s power saving mode. I’ll have to buy a USB print server. I’ll probably find one on sale either at CompUSA or Fry’s; they’re within blocks of each other.
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