Mean Field Games in Dynamic Ticket Pricing with Overselling and Cancellations

Abstract

We extend a finite-state Mean Field Game model of dynamic ticket pricing to allow overselling, stochastic cancellations, and terminal penalties for unresolved negative inventory. Cancellations generate upward inventory transitions, producing a bidirectional inventory process coupled with firms' pricing decisions. We formulate the representative-firm control problem and the population consistency conditions, and prove existence of a selected Markovian mean field equilibrium under the stated assumptions, including a compact price set and an explicit tie-breaking rule. Numerical experiments show that the quadratic terminal penalty can generate an endogenous soft-boundary mechanism that discourages progressively deeper overselling. Under a low-cancellation stress case, linear penalties more strongly reduce the prevalence of terminal overselling, whereas quadratic penalties reduce its conditional depth and lower-tail severity. A time-varying cancellation experiment suggests that anticipated future inventory recovery can support lower early prices and greater temporary overbooking exposure. Under the adopted demand normalization, stronger mean-field coupling is associated with lower equilibrium prices and slower inventory depletion. Together, these results provide a tractable framework for analyzing pricing and overbooking incentives in competitive ticket markets with cancellations.