Regulating an observable M/M/1 queue

Moshe Haviv
Binyamin Oz

Naor (1969) was the first to observe that in a single-server memoryless queue, customers who inspect the queue length upon arrival and accordingly decide whether to join or not may join even if from the social point of view they are worse of. The question then is how to mechanically design the system such that customers will join only queue lengths that are advised by society, while still minding their own selfish utility. After reviewing some existing mechanisms (some involving money transfers and some not), we suggest novel ones that do not involve money transfers. They possess some advantages over the existing ones, which we itemize.

September, 2015