Working Papers
Welfare Consequences of Upgrades: Evidence from the Airline Industry (RR, JEEA)
The welfare effects of upgrades - fees that allow consumers to access a premium product after purchasing a regular one - are ambiguous. On the one hand, upgrades enable consumers to obtain higher quality at a lower price; on the other, forward-looking consumers may delay purchasing premium products in anticipation of future discounts, and firms adjust prices to capture surplus. Whether total welfare rises or falls depends on the relative strength of these forces. In this paper, I disentangle these effects in the context of an international airline. I estimate a dynamic structural model in which forward-looking consumers form rational expectations about the upgrade option, and the airline optimally sets retail and upgrade prices over the booking horizon. I find that introducing upgrades improves the allocation of passengers across cabins, raising producer surplus by 1.3% and consumer surplus by 0.9%. These results are qualitatively similar whether or not consumers anticipate the upgrade option.
Presentations: UCLA proseminar, 2024 INFORMS RMP (2024), 2024 EEARIE 2024, PROSPER Seminars, Università degli Studi di Siena, 2024 European Winter Meeting of the Econometric Society, NHH, Liverpool School of Business, Università Ca' Foscari, Nova School of Business and Economics, Bocconi University 2026, EMAC, 2025 INFORMS (Marketing Science Conference)
The Effects of Within-Cart Price Increases on Consumer Behavior: Evidence from Field Experiments (joint work with Serkan Mehder, Ovunc Yilmaz, Jiankun Sun, and Zifeng Zhao)
Problem Definition. Online consumers can select a product or service at one price, only to encounter a higher price before purchase. In online retail, cart contents can generate such increases through promotional rules or seller assignment. We examine how these within-cart price increases affect shopping and purchasing behavior across carts and over time, and when platforms should absorb them by preserving earlier displayed prices at their own expense. Methodology/Results. We conduct three randomized field experiments with 1000Farmacie, an Italian online pharmacy marketplace, combining purchase outcomes with event-level clickstream data. Relative to absorption, pass-through reduces new-customer conversion by 9.95 percentage points and lowers expenditure. Conversion losses are greater for lower-value carts, particularly at larger price increases. Clickstream data show that pass-through increases initial removals of affected products, with much of the conversion loss involving customers who first remove a product and then abandon the purchase within minutes. Beyond the focal purchase, pass-through reduces subsequent purchasing over 90 days. Among recurring customers, conversion also falls, but less so for those who previously completed a purchase involving a within-cart price increase. Managerial Implications. We develop a selective-absorption framework, now implemented at 1000Farmacie, that uses initial cart information to determine which increases to absorb. The fitted rule maximizes predicted profit, including future customer value. In an out-of-sample experiment, the rule yields higher estimated profit and revenue than always passing through and higher estimated profit than always absorbing. We extend the framework to generate policies that trade some profit for additional revenue, allowing management to select the extent of absorption according to its profitability and growth objectives.
Presentations: 2025 INFORMS (Revenue Management and Pricing Conference 2025), ESADE Pricing Symposium 2025, LBS Pricing Symposium 2026, EWG Retail Operations Annual Meeting 2025, EMAC 2026, Eleventh Marketplace Innovation Workshop (MIW), Bocconi University (2025)
Work in Progress
Flexibility and Revenue Management: Experimental evidence from an international airline (joint work with Sungtak Hong, and Jinglong Zhao)
Presentations: Marketing Science 2026
The value of information: Evidence from the airline industry (joint work with William Burton, Daniel Fry, Adam Thorsteinson, Jason Wong)
Presentations: 2025 AGIFORS, 2025 SEA
Welfare Consequences of Upgrades: Evidence from the Airline Industry (RR, JEEA)
The welfare effects of upgrades - fees that allow consumers to access a premium product after purchasing a regular one - are ambiguous. On the one hand, upgrades enable consumers to obtain higher quality at a lower price; on the other, forward-looking consumers may delay purchasing premium products in anticipation of future discounts, and firms adjust prices to capture surplus. Whether total welfare rises or falls depends on the relative strength of these forces. In this paper, I disentangle these effects in the context of an international airline. I estimate a dynamic structural model in which forward-looking consumers form rational expectations about the upgrade option, and the airline optimally sets retail and upgrade prices over the booking horizon. I find that introducing upgrades improves the allocation of passengers across cabins, raising producer surplus by 1.3% and consumer surplus by 0.9%. These results are qualitatively similar whether or not consumers anticipate the upgrade option.
Presentations: UCLA proseminar, 2024 INFORMS RMP (2024), 2024 EEARIE 2024, PROSPER Seminars, Università degli Studi di Siena, 2024 European Winter Meeting of the Econometric Society, NHH, Liverpool School of Business, Università Ca' Foscari, Nova School of Business and Economics, Bocconi University 2026, EMAC, 2025 INFORMS (Marketing Science Conference)
The Effects of Within-Cart Price Increases on Consumer Behavior: Evidence from Field Experiments (joint work with Serkan Mehder, Ovunc Yilmaz, Jiankun Sun, and Zifeng Zhao)
Problem Definition. Online consumers can select a product or service at one price, only to encounter a higher price before purchase. In online retail, cart contents can generate such increases through promotional rules or seller assignment. We examine how these within-cart price increases affect shopping and purchasing behavior across carts and over time, and when platforms should absorb them by preserving earlier displayed prices at their own expense. Methodology/Results. We conduct three randomized field experiments with 1000Farmacie, an Italian online pharmacy marketplace, combining purchase outcomes with event-level clickstream data. Relative to absorption, pass-through reduces new-customer conversion by 9.95 percentage points and lowers expenditure. Conversion losses are greater for lower-value carts, particularly at larger price increases. Clickstream data show that pass-through increases initial removals of affected products, with much of the conversion loss involving customers who first remove a product and then abandon the purchase within minutes. Beyond the focal purchase, pass-through reduces subsequent purchasing over 90 days. Among recurring customers, conversion also falls, but less so for those who previously completed a purchase involving a within-cart price increase. Managerial Implications. We develop a selective-absorption framework, now implemented at 1000Farmacie, that uses initial cart information to determine which increases to absorb. The fitted rule maximizes predicted profit, including future customer value. In an out-of-sample experiment, the rule yields higher estimated profit and revenue than always passing through and higher estimated profit than always absorbing. We extend the framework to generate policies that trade some profit for additional revenue, allowing management to select the extent of absorption according to its profitability and growth objectives.
Presentations: 2025 INFORMS (Revenue Management and Pricing Conference 2025), ESADE Pricing Symposium 2025, LBS Pricing Symposium 2026, EWG Retail Operations Annual Meeting 2025, EMAC 2026, Eleventh Marketplace Innovation Workshop (MIW), Bocconi University (2025)
Work in Progress
Flexibility and Revenue Management: Experimental evidence from an international airline (joint work with Sungtak Hong, and Jinglong Zhao)
Presentations: Marketing Science 2026
The value of information: Evidence from the airline industry (joint work with William Burton, Daniel Fry, Adam Thorsteinson, Jason Wong)
Presentations: 2025 AGIFORS, 2025 SEA
