1 Real Options Applied to Consumer Goods: Maximizing Profits and Fan Welfare

This paper demonstrates that both consumer utility and profits increase when neutral site tournaments sell tickets via advanced selling and option framework. This strategy outperforms an advance selling strategy or always exercisable options strategy. Through this ticket pricing strategy, the organizer can realize a significant increase in profits as a result of a separating equilibrium pricing strategy. Simultaneously consumer welfare increases as fans know, with certainty, they have tickets to the game if their team makes it. If these options were offered by participants instead of organizer it allows them to smooth their revenues over time