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Center for Nonlinear Studies |
We examine the potential for simple auctions to more efficiently allocate arrival and departure slots during Ground Delay Programs (GDP's) than the currently used system. The analysis is conducted using a new approach to predicting strategic behavior called Predictive Game Theory (PGT). PGT models produce distribution-valued solution concepts whereas equilibrium solution concepts produce set-valued ones. Advantages of PGT include that it allows for decision-theoretic prediction and policy design as well as thorough risk analysis. We find that our simple slot auction overcomes several practical shortcomings of other approaches to GDP slot allocation. It also offers economically significant efficiency gains with respect to cur- rent practices and has the potential to lower airline costs. Finally, we find that the second price version of this auction dominates the first price version in nearly every decision-relevant category. This is despite the fact that none of the conventional arguments for second price auctions, such as dominant strategy implementability, even apply to GDP slot auctions.
Host: Russell Bent, Energy and Infrastructure Analysis D-4/Decision Applications, 667-9110