Pricing in Queues without Demand Information

31 Pages Posted: 9 Oct 2011 Last revised: 13 Jul 2013

See all articles by Moshe Haviv

Moshe Haviv

Hebrew University of Jerusalem - Department of Statistics

Ramandeep S. Randhawa

University of Southern California

Date Written: March 23, 2012


We consider revenue and social optimization in an M/M/1 queue with price and delay sensitive customers, and study the performance of uninformed pricing that does not require any arrival rate information. We formally characterize the optimal uninformed price and its performance relative to pricing with precise arrival rate knowledge. For uniformly distributed customer valuations, under a large set of parameters, we find that uninformed prices can capture more than 99% of the optimal revenue and more than 85% of the optimal social welfare. We further prove that the performance of uninformed prices improves as the customers become more delay sensitive and is always better under revenue optimization compared with social optimization.

Keywords: fixed pricing, static pricing, revenue management, welfare maximization, minimax regret, robust optimization

Suggested Citation

Haviv, Moshe and Randhawa, Ramandeep S., Pricing in Queues without Demand Information (March 23, 2012). Available at SSRN: or

Moshe Haviv

Hebrew University of Jerusalem - Department of Statistics ( email )

Mount Scopus
Jerusalem, 91904

Ramandeep S. Randhawa (Contact Author)

University of Southern California ( email )

Marshall School of Business
BRI 401, 3670 Trousdale Parkway
Los Angeles, CA 90089
United States

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