Queues with inspection cost: To see or not to see?

Abstract

Consider an M/M/1-type queue where joining attains a known reward, but a known waiting cost is paid per time unit spent queueing. In the 1960 s, Naor showed that any arrival optimally joins the queue if its length is less than a known threshold. Yet acquiring knowledge of the queue length often brings an additional cost, e.g., website loading time or data roaming charge. Therefore, our model presents any arrival with three options: join blindly, balk blindly, or pay a known inspection cost to make the optimal joining decision by comparing the queue length to Naor’s threshold. In a recent paper, Hassin and Roet-Green prove that a unique Nash equilibrium always exists and classify regions where the equilibrium probabilities are nonzero. We complement these findings with new closed-form expressions for the equilibrium probabilities in the majority of cases. Further, Hassin and Roet-Green show that minimising inspection cost maximises social welfare. Envisaging a queue operator choosing where to invest, we compare the effects of lowering inspection cost and increasing the queue-joining reward on social welfare. We prove that the former dominates and that the latter can even have a detrimental effect on social welfare.