Olivier Tercieux, Paris School of Economics

“Optimal Queue Design”

Abstract

We study the optimal design of a queueing system when agents’ arrival and servicing are governed by a general Markov process. The designer chooses entry and exit rules for agents, their service priority—or queueing discipline—as well as their information, while ensuring they have incentives to follow recommendations to join the queue and, importantly, to stay in the queue. Under a mild condition, at the optimal mechanism, agents are induced to enter up to a certain queue length and no agents are to exit the queue; agents are served according to a first-come-first-served (FCFS) rule; and they are given no information throughout the process beyond the recommendations they receive from the designer. 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, thus uncovering a hitherto unrecognized virtue of FCFS in this regard.

(Joint with Yeon-Koo Che, Columbia University)

Contact person: Andeas Bjerre-Nielsen