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Priority Auctions and Queue Disciplines That Depend on Processing Time

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  • Thomas Kittsteiner

    ()
    (Nuffield College, Oxford University, Oxford OX1 1NF, United Kingdom, and Department of Economics, University of Bonn, Lennéstrasse 37, 53113 Bonn, Germany)

  • Benny Moldovanu

    ()
    (Department of Economics, University of Bonn, Lennéstrasse 37, 53113 Bonn, Germany)

Abstract

We analyze the allocation of priority in queues via simple bidding mechanisms. In our model, the stochastically arriving customers are privately informed about their own processing time. They make bids upon arrival at a queue whose length is unobservable. We consider two bidding schemes that differ in the definition of bids (these may reflect either total payments or payments per unit of time) and in the timing of payments (before or after service). In both schemes, a customer obtains priority over all customers, waiting in the queue or arriving while he is waiting, who make lower bids. Our main results show how the convexity/concavity of the function expressing the costs of delay determines the queue discipline (i.e., shortest-processing-time-first (SPT), longest-processing-time-first (LPT)) arising in a bidding equilibrium.

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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 51 (2005)
Issue (Month): 2 (February)
Pages: 236-248

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Handle: RePEc:inm:ormnsc:v:51:y:2005:i:2:p:236-248

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Keywords: auctions; delay cost; incentive compatibility; priority pricing; queueing; queue disciplines;

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References

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  1. repec:wop:humbsf:2000-72 is not listed on IDEAS
  2. Jehiel, Phillipe & Moldovanu, Benny, 1999. "Efficient Design with Interdependent Valuations," Sonderforschungsbereich 504 Publications 99-74, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  3. Naor, P, 1969. "The Regulation of Queue Size by Levying Tolls," Econometrica, Econometric Society, vol. 37(1), pages 15-24, January.
  4. Hain, Roland & Mitra, Manipushpak, 2004. "Simple sequencing problems with interdependent costs," Games and Economic Behavior, Elsevier, vol. 48(2), pages 271-291, August.
  5. P. Dasgupta & Eric Maskin, 1998. "Efficient Auctions," Harvard Institute of Economic Research Working Papers 1857, Harvard - Institute of Economic Research.
  6. K. R. Balachandran, 1972. "Purchasing Priorities in Queues," Management Science, INFORMS, vol. 18(5-Part-1), pages 319-326, January.
  7. Tilt, Borge & Balachandran, K. R., 1979. "Stable and superstable customer policies in queues with balking and priority options," European Journal of Operational Research, Elsevier, vol. 3(6), pages 485-498, November.
  8. McAfee, R. Preston, 1991. "Efficient allocation with continuous quantities," Journal of Economic Theory, Elsevier, vol. 53(1), pages 51-74, February.
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Citations

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Cited by:
  1. Alex Gershkov & Benny Moldovanu, 2010. "Optimal Search, Learning and Implementation," Discussion Paper Series dp543, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  2. Gershkov, Alex & Schweinzer, Paul, 2006. "When queueing is better than push and shove," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 144, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  3. Moulin, Herve, 2005. "Split-Proof Probabilistic Scheduling," Working Papers 2004-06, Rice University, Department of Economics.
  4. Moulin, Herve, 2004. "On Scheduling Fees to Prevent Merging, Splitting and Transferring of Jobs," Working Papers 2004-04, Rice University, Department of Economics.
  5. Philippe Jehiel & Benny Moldovanu, 2005. "Allocative and Informational Externalities in Auctions and Related Mechanisms," Levine's Bibliography 784828000000000490, UCLA Department of Economics.
  6. Benny Moldovanu & Alex Gershkov, 2008. "The Trade-off Between Fast Learning and Dynamic Efficiency," 2008 Meeting Papers 348, Society for Economic Dynamics.
  7. Deniz Dizdar & Alex Gershkov & Benny Moldovanu, 2010. "Revenue Maximization in the Dynamic Knapsack Problem," Discussion Paper Series dp544, The Center for the Study of Rationality, Hebrew University, Jerusalem.
  8. Dirk Bergemann & Maher Said, 2010. "Dynamic Auctions: A Survey," Levine's Working Paper Archive 661465000000000111, David K. Levine.
  9. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2005. "Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords," NBER Working Papers 11765, National Bureau of Economic Research, Inc.
  10. Heidrun C. Hoppe & Benny Moldovanu & Aner Sela, 2009. "The Theory of Assortative Matching Based on Costly Signals," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 253-281.
  11. Moulin, Hervé, 2008. "Proportional scheduling, split-proofness, and merge-proofness," Games and Economic Behavior, Elsevier, vol. 63(2), pages 567-587, July.

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