Cued to Queue: Information in Waiting-Line Auctions

TL;DR

This paper examines how different information policies about queue length affect agent behavior and efficiency in waiting-line auctions, revealing that the timing and nature of information significantly influence surplus and efficiency.

Contribution

It introduces a model analyzing the impact of information policies on queue dynamics and identifies conditions under which revealing bad news optimizes surplus.

Findings

Sudden bad news prompts multiple agents to join simultaneously.

Information policies' effects depend on the hazard rate of value distribution.

Optimal policy varies with queue fullness and hazard rate.

Abstract

We study the effect of providing information to agents who queue before a scarce good is distributed at a fixed time. Many information policies reveal "sudden bad news," when agents learn the queue is longer than previously believed. Sudden bad news causes assortative inefficiency by prompting multiple agents to simultaneously join the queue. If the value distribution has an increasing (decreasing) hazard rate, information policies that release sudden bad news increase (decrease) total surplus, relative to releasing no information. If agents incur entry costs and the hazard rate is decreasing, the optimal policy reveals only when the queue is full.