Incentive effects of multiple-server queueing networks: The principal-agent perspective

Sin Man Choi, Ximin Huang, Wai Ki Ching, Min Huang

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

A two-server service network has been studied from the principal-agent perspective. In the model, services are rendered by two independent facilities coordinated by an agency, which seeks to devise a strategy to suitably allocate customers to the facilities and to simultaneously determine compensation levels. Two possible allocation schemes were compared-viz. the common queue and separate queue schemes. The separate queue allocation scheme was shown to give more competition incentives to the independent facilities and to also induce higher service capacity. In this paper, we investigate the general case of a multiple-server queueing model, and again find that the separate queue allocation scheme creates more competition incentives for servers and induces higher service capacities. In particular, if there are no severe diseconomies associated with increasing service capacity, it gives a lower expected sojourn time in equilibrium when the compensation level is sufficiently high.

Original languageEnglish (US)
Pages (from-to)379-402
Number of pages24
JournalEast Asian Journal on Applied Mathematics
Volume1
Issue number4
DOIs
StatePublished - Nov 2011

Keywords

  • Capacity allocation
  • Competition
  • Incentive theory
  • Markovian queueing systems
  • Nash equilibrium
  • Principal agent

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