United versus Churchill, Who's Worse?

So, in one corner we have United Airlines. We all heard about that today - they overbooked a flight, offered the usual bonus on the booking (in this case, they went up to $800) to get someone to leave the plane, and when no one took them up on it, they had the cops forcibly remove a dude from his seat.

That's some bad mojo.

Overbooking, as a rule, is something often done, accepted, and not without reason. It's economically sound. But, as they say, the cover up is worse than the crime. Man, it's worth typing again, that's some bad mojo.

In another corner, we have the Churchill Downs pick 6. In this instance, one lucky ticket holder was poised for a chance at a $750,000 score on a 20-1 shot in the last leg of a jackpot pick 6. The last leg was cancelled after a brief delay due to the weather. Snooze you lose Mr. Customer. Don't measure the drapes!

This could be described as economically sound as well, because if a pick 6 carries over, the track makes mucho moola with the next carryover, and the next and the next. It's some serious scratch.

So, the big question: Who is worse in this customer service tete a tete of evil?

If we are looking from a customer service perspective, they both get some bad marks. It's like trying to decide if Waterworld was worse than the last Nicholas Cage movie.

Economically, though, we can explore this a little further.

If you or I overbook, we are offered cold hard cash, or flight credits. I got over $2,000 once and I gladly sat down and waited for my next flight (I played Aqueduct while waiting and lost $500 of it, but what else is new). A decent rule of thumb - you get paid 400% what your ticket is worth. So, your inconvenience has a number.

For Churchill Downs, this bettor didn't get any utility; unless he masochistically got some enjoyment from getting the shaft.

What would Churchill have to do for it to equate to what United or other airlines do?

Well, if the player had a 5% chance to hit for $750,000, CDI would have had to offer the man or woman a chance at winning 4 times that amount, or give him or her 4 times the chance to hit $750,000. In effect, they'd let the ticket holder play roulette, where landing on 20% of the numbers earn them $750,000, or 5% of the numbers earn them $3,000,000.

That's pretty fair. In fact, I'd hope for rain, kinda like I hope getting kicked off a plane. 

So, in terms of expected value, we may conclude United is Goldfinger and Churchill is the Death Star.

But, where this gets more interesting -  we can probably take points against United for being boneheads (they went to $800, they just had to keep going up by a Benjamin until someone said yes .... $1,000 should've done it). And again, the poor sap who had his chances at a life changing score at Churchill didn't get forcibly removed from his bedroom in his underwear by baton wielding coppers.

I think it's fair we call it a tie.

Have a nice Monday everyone!


Unknown said...

The Pick 6 on the day in question paid on "ALL" in the last leg with each "winning" combination worth $592.12.

Pull the Pocket said...

A 20% chance of 1.5 million wings on wing night, or 1,184 wings on wing night..... I know what you're choosing Edward!


Unknown said...

Small quibble on the 400% math as well. The expected value of the winning ticket is $37,500, so United would have offered $150,000.

Also, something with a 5% chance of happening will happen at least once out of four times 18.55% of the time. E.g. the odds of hitting a 19-to-1 shot at least once in four races is about 9-to-2.

Pull the Pocket said...

That's good Ed.

Steve S said...

What does 20-1 mean in this context? I assume there were more than 20 live tickets at the end of the 5th race making it "not really 20-1" -- at a 50 cent minimum, if we follow the IRS's logic, the odds would be 1,500,000-1, right?

I like the analogy to airlines paying 400% of the ticket price, but, I mean, how often does this happen in a rainbow pick 6? It seems like in these situations there should be a less complicated way to turn it into a no-muss, no-fuss pick-5 payout for everyone who's alive at the end of 5 races.


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