Auctioning and Selling Positions: A Non-cooperative Approach to Queuing Conflicts

This discussion paper resulted in a publication in the 'Journal of Economic Theory', 2014, 153, 33-45.<P> Complementary to the axiomatic and mechanism design studies on queueing problems, this paper proposes a strategic bargaining approach to resolve queueing conflicts. Given a situation where players with different waiting costs have to form a queue in order to be served, they firstly compete with each other for a specific position in the queue. Then, the winner can decide to take up the position or sell it to the others. In the former case, the rest of the players will proceed to compete for the remaining positions in the same manner; whereas for the latter case the seller can propose a queue with corresponding payments to the others which can be accepted or rejected. Depending on which position players are going to compete for, the subgame perfect equilibrium outcome of the corresponding mechanism coincides with one of the two best known rules for queueing problems, t he maximal and the minimal transfer rules, while an efficient queue is always formed in equilibrium. The analysis discovers a striking relationship between pessimism and optimism in this type of decision making.