Bundling in advance sales: Theory and evidence from round-trip vs two one-way tickets

We develop a model to derive an optimal price for bundle of two goods when buyers are risk averse and uncertain about the valuation each good. In theory, depends not only on probability positive good, but also correlation between valuations. analyze unique airlines dataset in which we directly observe prices both bundled (round trip ticket) unbundled items (two one-way tickets) identical itineraries. find that offer discounts, these discounts increase outbound inbound demands is higher. Moreover, higher certainty demand decreases bundling discounts. decrease with competition.