Electrical Engineering and Computer Science

Systems Science Seminar

Optimal Signaling Mechanisms in Unobservable Queues

Krishnamurthy Iyer

Assistant Professor
Cornell University
Friday, September 08, 2017
2:00pm - 3:00pm
2311 EECS

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About the Event

We consider the problem of optimal information sharing in the context of a service system. In particular, we consider an unobservable single server queue offering service at a fixed price to a Poisson arrival of delay-sensitive customers. The service provider can observe the queue, and may share information about the state of the queue with each arriving customer. The customers are Bayesian and strategic, and incorporate any information provided by the service provider into their beliefs about the queue size before deciding whether to join the queue or leave without obtaining service. We pose the following question: which signaling mechanism should the service provider adopt to maximize her revenue? We establish that, in general, the optimal signaling mechanism requires the service provider to strategically conceal information from the customers to incentivize them to join. In particular, we show that a signaling mechanism with two signals and a threshold structure is optimal. Furthermore, for the case of linear waiting costs, we obtain analytical expressions for the thresholds of the optimal signaling mechanism. Finally, we prove that the optimal signaling mechanism under the optimal fixed price can achieve the revenue of the optimal state-dependent pricing mechanism. This suggests that in settings where state-dependent pricing is not feasible, the service provider can effectively use optimal signaling to achieve the optimal revenue. Our work contributes to the literature on Bayesian persuasion in dynamic settings, and provides many interesting directions for extensions. (joint work with David Lingenbrink, Cornell University)


Krishnamurthy Iyer is an Assistant Professor in the School of Operations Research and Information Engineering at Cornell University. He received his PhD from the Department of Management Science and Engineering at Stanford University in 2012, and his B.Tech and M.Tech (dual degree) in Mechanical Engineering at the Indian Institute of Technology, Bombay in 2006. Before coming to Cornell, he was a Postdoctoral Researcher at the Computer and Information Science Department in the University of Pennsylvania. His research interests include game theory, stochastic modeling, dynamic markets, and mean field models.

Additional Information

Contact: Judi Jones

Phone: 763-8557

Email: asap@umich.edu

Sponsor(s): ECE - Systems

Open to: Public