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Priority Auctions and Queue Disciplines That Depend on Processing Time

  • 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)

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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File URL: http://dx.doi.org/10.1287/mnsc.1040.0301
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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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  1. Jehiel, Phillipe & Moldovanu, Benny, 1998. "Efficient Design with Interdependent Valuations," Sonderforschungsbereich 504 Publications 98-22, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  2. K. R. Balachandran, 1972. "Purchasing Priorities in Queues," Management Science, INFORMS, vol. 18(5-Part-1), pages 319-326, January.
  3. Manipushpak Mitra & Roland Hain, 2001. "Simple Sequencing Problems with Interdependent Costs," Bonn Econ Discussion Papers bgse20_2001, University of Bonn, Germany.
  4. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 341-388, May.
  5. Naor, P, 1969. "The Regulation of Queue Size by Levying Tolls," Econometrica, Econometric Society, vol. 37(1), pages 15-24, January.
  6. McAfee, R. Preston, 1991. "Efficient allocation with continuous quantities," Journal of Economic Theory, Elsevier, vol. 53(1), pages 51-74, February.
  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.
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