Cued to Queue: Information in Waiting-Line Auctions
Jack Hirsch, Eric Tang
TL;DR
This paper analyzes how public information about queue length affects welfare in waiting-line auctions, where $n$ risk-neutral agents with private values drawn from $F$ compete for $k$ identical units distributed at time $t=0$. It develops a formal queueing model with information policies (trivial, fixed-time, and full-revelation) and shows that information policies that reveal sudden bad news can induce mass rushing and assortative inefficiency; the welfare impact hinges on the hazard rate of $F$: increasing hazard rates favor information that reveals bad news, while decreasing hazard rates favor hiding information. The authors also show that continuous bad news can be consistent with efficiency in some cases, and that with entry costs, an intermediate disclosure strategy—revealing only when the queue is full—can maximize welfare. These results have practical relevance for organizations distributing scarce goods, offering guidance on how to design information releases to balance screening and waiting costs while considering the underlying value distribution.
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.