The Effect of Loss Preference on Queueing with Information Disclosure Policy

Jian Cao (), Yongjiang Guo () and Zhongxin Hu ()
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Jian Cao: Beijing Univeristy of Posts and Telecommunications
Yongjiang Guo: Beijing Univeristy of Posts and Telecommunications
Zhongxin Hu: Beijing Univeristy of Posts and Telecommunications

Methodology and Computing in Applied Probability, 2023, vol. 25, issue 3, 1-25

Abstract: Abstract In this paper, we incorporate loss preference into an M/M/1 queueing with a threshold disclosure policy and analyze its impact on the customers’ queueing strategies and the queueing system’s idle stationary probability. In the queueing system, customers are strategic and divided into two groups: the informed and the uninformed. Informed customers are assumed to be fully rational, whereas uninformed customers are assumed to have loss preference. Uninformed customers with loss preference are categorized into two types according to their asymmetry perceptions, which anchor on the difference between gain and loss: loss neutrality and loss aversion. We firstly determine customers’ equilibrium decisions, and then derive the idle stationary probability at equilibrium. We find that loss preference reduces the customers’ joining probability, and results in a higher idle stationary probability. Furthermore, we find that for the uninformed customers with stronger loss aversion, the system manager should lower the threshold of disclosure to maintain a stable demand of uninformed customers. In addition, in the case of mixed-strategy at equilibrium, with the increase of the threshold of disclosure, the idle stationary probability increases for an underloaded queue. However, for an overloaded queue, the idle stationary probability decreases with increasing the threshold of disclosure.

Keywords: Strategic queueing; Threshold information disclosure; Loss aversion; Loss neutrality; Equilibrium analysis; 60K25; 90B22; 91A30 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11009-023-10047-w

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