Mechanism Design in Queueing Problems
Posted: 26 Jul 2001
A well-known result in incentive theory is that for a very broad class of decision problems, there is no mechanism which achieves truth-telling in dominant strategies, efficiency and budget balancedness (or first best implementability). On the contrary, Mitra and Sen (1998), prove that linear cost queueing problems are first best implementable. This paper is an attempt at identification of cost structures for which queueing problems are first best implementable. The broad conclusion is that, this is a fairly large class. Some of these first best implementable problems can be implemented by mechanisms that satisfy individual rationality.
Keywords: Dominant strategy incentive compatibility, Efficiency, Budget balancedness, Individual rationality.
JEL Classification: C44, C72, C78, D82
Suggested Citation: Suggested Citation