An optimal mechanism charging for priority in a queue

Moshe Haviv; Eyal Winter

doi:10.1016/j.orl.2020.03.010

An optimal mechanism charging for priority in a queue

Moshe Haviv^*, Eyal Winter

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

2 Scopus citations

Abstract

We derive a revenue-maximizing scheme that charges customers who are homogeneous with respect to their waiting cost parameter, for a random fee in order to become premium customers. This scheme incentivizes all customers to purchase priority, each at his/her drawn price. This is repeated for the case where customers are heterogeneous. The mechanisms are based on the fact that once some customers get priority, its value of the other gets even higher.

Original language	American English
Pages (from-to)	304-308
Number of pages	5
Journal	Operations Research Letters
Volume	48
Issue number	3
DOIs	https://doi.org/10.1016/j.orl.2020.03.010
State	Published - May 2020
Externally published	Yes

Bibliographical note

Funding Information:
The first author was partially supported by the Israel Research Fund , Grant no. 511/15 and no. 1512/19 .

Funding Information:
The first author was partially supported by the Israel Research Fund, Grant no. 511/15 and no. 1512/19.

Publisher Copyright:
© 2020 Elsevier B.V.

Keywords

Charging mechanisms
Priorities
Queues

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10.1016/j.orl.2020.03.010

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title = "An optimal mechanism charging for priority in a queue",

abstract = "We derive a revenue-maximizing scheme that charges customers who are homogeneous with respect to their waiting cost parameter, for a random fee in order to become premium customers. This scheme incentivizes all customers to purchase priority, each at his/her drawn price. This is repeated for the case where customers are heterogeneous. The mechanisms are based on the fact that once some customers get priority, its value of the other gets even higher.",

keywords = "Charging mechanisms, Priorities, Queues",

author = "Moshe Haviv and Eyal Winter",

note = "Funding Information: The first author was partially supported by the Israel Research Fund , Grant no. 511/15 and no. 1512/19 . Funding Information: The first author was partially supported by the Israel Research Fund, Grant no. 511/15 and no. 1512/19. Publisher Copyright: {\textcopyright} 2020 Elsevier B.V.",

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AU - Winter, Eyal

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PY - 2020/5

Y1 - 2020/5

N2 - We derive a revenue-maximizing scheme that charges customers who are homogeneous with respect to their waiting cost parameter, for a random fee in order to become premium customers. This scheme incentivizes all customers to purchase priority, each at his/her drawn price. This is repeated for the case where customers are heterogeneous. The mechanisms are based on the fact that once some customers get priority, its value of the other gets even higher.

AB - We derive a revenue-maximizing scheme that charges customers who are homogeneous with respect to their waiting cost parameter, for a random fee in order to become premium customers. This scheme incentivizes all customers to purchase priority, each at his/her drawn price. This is repeated for the case where customers are heterogeneous. The mechanisms are based on the fact that once some customers get priority, its value of the other gets even higher.

KW - Charging mechanisms

KW - Priorities

KW - Queues

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DO - 10.1016/j.orl.2020.03.010

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VL - 48

SP - 304

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JO - Operations Research Letters

JF - Operations Research Letters

IS - 3

ER -

An optimal mechanism charging for priority in a queue

Abstract

Bibliographical note

Keywords

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