Question

ABC Airlines has 1,000 customers. These customers are of two types. Day customers are willing to pay $700 for a flight that has a daytime departure and arrival but only $200 for a flight on the red-eye. Night customers will pay $500 for a flight that has a daytime departure and $300 for a flight on the red-eye. You are the manager for Fli-By-Nite and are unable to determine whether any given individual is a day customer or a night customer. Can you think of a self-selection mechanism that would permit you to identify day and night customers?

Answer 1

A self-selection mechanism that would permit me to identify day and night customers is to look at the price a customer has paid for the flights availed. As a day customer pays $700 for a flight that has a daytime departure and arrival but only $200 for a flight on the red-eye, hence filter must be set on the prices paid by the customers and selecting the list of customers who have paid those particular prices and categorise them as day customers. Similarly, night customer pays 500 for a flight that has a daytime departure and $300 for a flight on the red-eye. Hence filter must be set on those prices paid by the customers and classify them as night customers.