An optimal mechanism charging for priority in a queue
Theoretical Economics
2020-02-18 v1 Computer Science and Game Theory
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. We also design a revenue-maximizing scheme for the case where customers are heterogeneous with respect to their waiting cost parameter. Now lower cost parameter customers are encouraged to join the premium class at a low price: Given that, those with high cost parameter would be willing to pay even more for this privilege.
Cite
@article{arxiv.2002.06533,
title = {An optimal mechanism charging for priority in a queue},
author = {Moshe Haviv and Eyal Winter},
journal= {arXiv preprint arXiv:2002.06533},
year = {2020}
}