AEG's Creative Offer to MJ FansThis letter to the Undercover Economist is from a Michael Jackson fan who had ordered tickets to one of the many concerts that will never happen. AEG is offering either a refund or a ticket to the event that will never happen, presumably as a collectible. Tim Harford offers advice on how to decide whether to ask for a refund or for the ticket:
From a game theorist’s perspective, the equilibrium solution is clear. Let us say that memento and refund are equally valuable if 100,000 take the memento and 700,000 take the refund. In that case, each fan should independently adopt a “mixed strategy” with a one-eighth probability of taking the memento. (A nerdy hint: roll three dice; there is a one in eight chance that the total is exactly 10.) Every fan will be happy to randomise, because every fan will know that either way, he or she will get something of equivalent value.
I realise all this sounds implausible, and it is. Game theory makes demanding assumptions about human rationality that may not apply to grieving fans. I would pay closer attention to research in economic psychology that suggests people are very unwilling to part with an item once they feel a sense of ownership. A non-nostalgic fan should go for the refund.
I once held tickets to Old Tucson for the night it burned down; I was actually on site as the fire began. Of course there were not 800,000 people there that night (more like 100, I would guess), and I figure the market of those interested in Old Tucson is somewhat smaller than those interested in Michael Jackson (though my preferences go the other way). I also never faced the dilemma of trading off the ticket against a potential refund (I had not personally paid for it anyway). I have no idea where it is now, though at one point I thought of trying it out on eBay.