Equilibrium in Queues Under Unknown Service Rates and Service Value

16 Pages Posted: 17 Nov 2011

See all articles by Laurens Debo

Laurens Debo

Dartmouth College - Tuck School of Business

Senthil K. Veeraraghavan

University of Pennsylvania - The Wharton School - Operations, Information and Decisions

Date Written: January 1, 2011

Abstract

We study a single queue joining equilibrium when there is uncertainty in the consumers' minds about the service rate and value. Without such uncertainty, the joining equilibria are characterized by means of a single threshold queue length above which consumers do not join (Naor, 1969). We show that in the presence of such uncertainty, the equilibrium joining strategy is not fully characterized by a single threshold. A “sputtering equilibrium” might exist. In the sputtering equilibrium, the queue length generally remains within a threshold, but reaches another, strictly higher, threshold, depending on the outcome of the randomized decision of the consumer arriving at the lower threshold. We discuss when and why sputtering equilibria exist.

Keywords: Queueing games, Markov Perfect Bayesian Equilibrium, Threshold policies

Suggested Citation

Debo, Laurens and Veeraraghavan, Senthil K., Equilibrium in Queues Under Unknown Service Rates and Service Value (January 1, 2011). Chicago Booth Research Paper No. 11-45, Available at SSRN: https://ssrn.com/abstract=1960651 or http://dx.doi.org/10.2139/ssrn.1960651

Laurens Debo (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

Senthil K. Veeraraghavan

University of Pennsylvania - The Wharton School - Operations, Information and Decisions ( email )

Philadelphia, PA 19104
United States

HOME PAGE: http://https://oid.wharton.upenn.edu/profile/senthilv/

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