Auctioning and Selling Positions: A Non-Cooperative Approach to Queuing Conflicts

Tinbergen Institute Discussion Papers 14-016/II

31 Pages Posted: 31 Jan 2014

See all articles by René van den Brink

René van den Brink

VU University Amsterdam - Department of Economics; Tinbergen Institute; Tinbergen Institute

Youngsub Chun

Seoul National University - School of Economics

Yuan Ju

University of York; Tilburg University

Date Written: January 13, 2014

Abstract

Complementary to the axiomatic and mechanism design studies on queueing problems, this paper proposes a strategic bargaining approach to resolve queueing conflicts. Given a situation where players with different waiting costs have to form a queue in order to be served, they firstly compete with each other for a specific position in the queue. Then, the winner can decide to take up the position or sell it to the others. In the former case, the rest of the players will proceed to compete for the remaining positions in the same manner; whereas for the latter case the seller can propose a queue with corresponding payments to the others which can be accepted or rejected. Depending on which position players are going to compete for, the subgame perfect equilibrium outcome of the corresponding mechanism coincides with one of the two best known rules for queueing problems, the maximal and the minimal transfer rules, while an efficient queue is always formed in equilibrium. The analysis discovers a striking relationship between pessimism and optimism in this type of decision making.

Keywords: Queueing problem, minimal transfer rule, maximal transfer rule, Shapley value, bidding mechanism, implementation

JEL Classification: C71, C72, D60

Suggested Citation

van den Brink, J.R. (René) and Chun, Youngsub and Ju, Yuan, Auctioning and Selling Positions: A Non-Cooperative Approach to Queuing Conflicts (January 13, 2014). Tinbergen Institute Discussion Papers 14-016/II, Available at SSRN: https://ssrn.com/abstract=2388060 or http://dx.doi.org/10.2139/ssrn.2388060

J.R. (René) Van den Brink (Contact Author)

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Youngsub Chun

Seoul National University - School of Economics ( email )

San 56-1, Silim-dong, Kwanak-ku
Seoul 151-742
Korea

Yuan Ju

University of York ( email )

Department of Economics and Related Studies
Heslington
York, YO10 5DD
United Kingdom

Tilburg University

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

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