Optimal Queue Design

Yeon-Koo Che and Olivier Tercieux

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Abstract: We study the optimal method for rationing scarce resources through a queue system. The designer controls agents' entry into a queue and their exit, their service priority -- or queueing discipline -- as well as their information about queue priorities, while providing them with the incentive to join the queue and, importantly, to stay in the queue, when recommended by the designer. Under a mild condition, the optimal mechanism induces agents to enter up to a certain queue length and never removes any agents from the queue; serves them according to a first-come-first-served (FCFS) rule; and provides them with no information throughout the process beyond the recommendations they receive. FCFS is also necessary for optimality in a rich domain. We identify a novel role for queueing disciplines in regulating agents' beliefs and their dynamic incentives and uncover a hitherto unrecognized virtue of FCFS in this regard.

Date: 2023-07
New Economics Papers: this item is included in nep-des and nep-mic
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