If you plan to buy tickets to a sold-out game, are you better off buying in advance or waiting until game day? Most people would say buy ahead, but it turns out that's wrong.
Duke University economist Andrew Sweeting says those tickets cost more about three months before the game. The results are part of a program of studying perishable goods markets, meaning markets for products with expiration dates.
Sweeting and his team of graduate students used ticket prices for Major League Baseball games I 2007 as a case study.
The overall aim of my research is to understand how sellers behave and how markets of these kinds of goods should be designed. Once you look at how prices behave, that has a lot of implications for how consumers think about timing their decisions in these markets, Sweeting said in a statement.
Sweeting took a close look at auction sites such as StubHub and eBay, which are among the largest markets for game tickets. He found that prices generally drop by about 30 percent in the month before a game, and some sellers cut prices by 60 percent if they haven't sold a ticket.
Part of the reason is this happens is that the ticket loses all value once the game actually ends, and significant value once the game starts. As one is unlikely to sell it in the future, the seller loses nothing by lowering the price (except what they paid for the ticket to begin with). This is in contrast to other kinds of goods, where sometimes selling it in the future can bring a higher price than selling it today.
Even for the highest demand games such as Red Sox-versus-Yankees games, prices tend to decline, notes Sweeting. Even popular games have a lot of availability of those tickets close to the game.
Sports tickets are different from airline tickets, which get more expensive the closer you get to take-off. One reason is people who decide that they want to travel at the last minute, such as business people, tend to have pretty inflexible schedules. They are therefore willing to pay more. Those taking vacations usually know they want to go well in advance. An airline will therefore try to encourage vacationers by discounting tickets ahead of time and squeezing more revenue from the last-minute flyers.
It just doesn't pay for airlines to unload unsold tickets by lowering prices at the last minute, says Sweeting. For sports events, there is no reason to believe that people who decide they want to go to a game at the last minute will be willing to pay more than dedicated fans who may plan to go to a game months in advance.