I just noticed something odd. It’s not that odd: the cognitive bias that powers it is well know. It’s more odd that a company is leaving money on the table by not exploiting it.
I primarily fly United and book rental cars with Avis. United offers to let you buy refundable fares for a little more than the price of a normal ticket. Avis let’s you pre-pay for your rental car to receive a discount. These are symmetrical situations presented with a different framing because the default action is different in the two cases: on United the default is to have a non-refundable ticket and with Avis the default is to have an effectively refundable rental (because you don’t pay until pickup).
I find that I basically never buy refundable tickets from United and never pre-pay for my rental car. My mind offers these reasons: the refundable airline fare is effectively insurance and not worth it in expectation since I have to money to eat the cost of the ticket (and in practice, because I’m a loyal customer with status, they’ll almost always let me convert my fare to future ticket credit rather than take my money), and pre-paying for the rental car takes away flexibility in travel plans I want to have.
But this is crazy! I should be pre-paying for the rental car if I’m effectively doing the same for the flight. The situation is basically the same. Yet I don’t because of which things is the default action.
So what’s odd is that United is not taking advantage of this to make refundable fares the default and let me choose a discount to get a non-refundable fare. Maybe now that I’m used to the current situation I would always choose the non-refundable fare, but they’d likely get more people to buy them if it was the default action.
I wonder why they don’t? My best guesses are regulation preventing that and price competition making it more worthwhile to make the cheapest fare possible the default and sell everything else as an add-on rather than offering discounts. But then why is the rental car market different?
My guess is that “rental car market” has less direct/local competition while the airlines are centralized on the airport routes and many cheap flight search engines( ex. Kiwi.com) make this a favorable mindset. Is there a price comparison for car rentals?
I just noticed something odd. It’s not that odd: the cognitive bias that powers it is well know. It’s more odd that a company is leaving money on the table by not exploiting it.
I primarily fly United and book rental cars with Avis. United offers to let you buy refundable fares for a little more than the price of a normal ticket. Avis let’s you pre-pay for your rental car to receive a discount. These are symmetrical situations presented with a different framing because the default action is different in the two cases: on United the default is to have a non-refundable ticket and with Avis the default is to have an effectively refundable rental (because you don’t pay until pickup).
I find that I basically never buy refundable tickets from United and never pre-pay for my rental car. My mind offers these reasons: the refundable airline fare is effectively insurance and not worth it in expectation since I have to money to eat the cost of the ticket (and in practice, because I’m a loyal customer with status, they’ll almost always let me convert my fare to future ticket credit rather than take my money), and pre-paying for the rental car takes away flexibility in travel plans I want to have.
But this is crazy! I should be pre-paying for the rental car if I’m effectively doing the same for the flight. The situation is basically the same. Yet I don’t because of which things is the default action.
So what’s odd is that United is not taking advantage of this to make refundable fares the default and let me choose a discount to get a non-refundable fare. Maybe now that I’m used to the current situation I would always choose the non-refundable fare, but they’d likely get more people to buy them if it was the default action.
I wonder why they don’t? My best guesses are regulation preventing that and price competition making it more worthwhile to make the cheapest fare possible the default and sell everything else as an add-on rather than offering discounts. But then why is the rental car market different?
My guess is that “rental car market” has less direct/local competition while the airlines are centralized on the airport routes and many cheap flight search engines( ex. Kiwi.com) make this a favorable mindset.
Is there a price comparison for car rentals?