Let the guest know that if they made a mistake in booking, that they have to cancel. You'll be penalized if you cancel so don't cancel on their behalf. Advise them to reach out to support if they have any questions, but that as a host, you cannot cancel for the guest. It's almost the most important hosting rule - never cancel for the guest. When a host initiates the cancelation the following happens:
1) calendar is blocked so you're not able to offer those dates to other guests
2) you lose the ability to be a superhost for A YEAR!
3) financial cancelation penalty, not sure if you're penalized for the first cancelation or if it's only for a second cancelation, but there is some financial hit.
Since it's an honest mistake, you may want to over ride your cancelation policy if you have a 'strict' policy in place which means you'd keep half the booking cost in case of a cancelation. You will be given the opportunity to refund $$ once the guest cancels.