On Threshold Routing in a Service System with Highest-Bidder-First and FIFO Services

TL;DR

This paper analyzes a two-server system with FIFO and highest-bidder-first queues, characterizing equilibrium customer routing through threshold-based decision rules in a heterogeneous customer setting.

Contribution

It introduces a novel model combining FIFO and HBF queues and derives the equilibrium routing thresholds for customers' server choices.

Findings

Equilibrium routing is characterized by two thresholds.

Customers' server choice depends on their valuation and bid.

The model provides insights into customer behavior in mixed queue systems.

Abstract

In this paper, we consider a two server system serving heterogeneous customers. One of the server has a FIFO scheduling policy and charges a fixed admission price to each customer. The second queue follows the highest-bidder-first (HBF) policy where an arriving customer bids for its position in the queue. Customers make an individually optimal choice of the server and for such system, we characterize the equilibrium routing of customers. We specifically show that this routing is characterized by two thresholds.