Blind Queues: The Impact of Consumer Beliefs on Revenues and Congestion

Loading...
Thumbnail Image
Penn collection
Finance Papers
Degree type
Discipline
Subject
consumer decisions
lack of information
service revelation
consumer beliefs
queueing
Finance and Financial Management
Funder
Grant number
License
Copyright date
Distributor
Related resources
Author
Cui, Shiliang
Veeraraghavan, Senthil K
Contributor
Abstract

In many service settings, customers have to join the queue without being fully aware of the parameters of the service provider (e.g., customers at checkout counters may not know the true service rate before joining). In such “blind queues,” customers make their joining/balking decisions based on limited information about the service provider’s operational parameters (from past service experiences, reviews, etc.) and queue lengths. We analyze a firm serving customers making decisions under arbitrary beliefs about the service parameters in an observable queue for a service with a known price. By proposing an ordering for the balking threshold distributions in the customer population, we are able to compare the effects of customer beliefs on the queue. We show that, although revealing the service information to customers improves revenues under certain conditions, it may destroy consumer welfare or social welfare. Given a market size, consumer welfare can be significantly reduced when a fast server announces its true service parameter. When revenue is higher under some beliefs, one would expect the congestion to also be higher because more customers join, but we show that congestion may not necessarily increase.

Advisor
Date Range for Data Collection (Start Date)
Date Range for Data Collection (End Date)
Digital Object Identifier
Series name and number
Publication date
2016-12-01
Journal title
Management Science
Volume number
Issue number
Publisher
Publisher DOI
Journal Issue
Comments
Recommended citation
Collection