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Another solution is even more simpler. After all seats gets booked, they should clearly mark overbooked tickets as "probable" tickets and heavily discount it + refund it if not eventually available. Keep in mind that airlines don't make huge profits per flight. Giving away $10K to 4 passengers is like giving away 80 seats or about 10 to 20% of revenue which could be almost all of their profits for that flight.

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Those airlines take a risk by overbooking, and that risk can be penalized by a net negative profit if need be. If you're allowed to gamble, you need to be able to lose.

Yup, and moreover like any good casino it's pretty clear that they did the math already. That's why you're getting $800 fake bucks: they crunch figures on how much of that $800 they'd be on the hook for. If they gave you cash, I bet the inflection point where this entire overbooking scheme is actually fiscally worth it, becomes a losing proposal.

This is how they do in Indian railways. We book tickets. If it's full, we get waiting list number which will be confirmed a day before or on traveling day. If not confirmed, it will be cancelled automatically and refund sent to your account.

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