Joining a Queue or Staying Out: Effects of Information Structure and Service Time on Arrival and Staying Out Decisions

We study a class of single-server queueing systems with a finite population size, FIFO queue discipline, and no balking or reneging. In contrast to the predominant assumptions of queueing theory of exogenously determined arrivals and steady state behavior, we investigate queueing systems with endogenously determined arrival times and focus on transient rather than steady state behavior. When arrival times are endogenous, the resulting interactive decision process is modeled as a non-cooperative n-person game with complete information. Assuming discrete strategy spaces, the mixed-strategy equilibrium solution for groups of n = 20 agents is computed using a Markov chain method. Using a 2 × 2 between-subject design (private vs. public information by short vs. long service time), arrival and staying out decisions are presented and compared to the equilibrium predictions. The results indicate that players generate replicable patterns of behavior that are accounted for remarkably well on the aggregate, but not individual, level by the mixed-strategy equilibrium solution unless congestion is unavoidable and information about group behavior is not provided.JEL Classification: C71, C92, D81     

The impact of variance estimation in option valuation models

This paper examines some implications of using an estimate of the variance in option valuation models. This procedure produces biased option values. It is shown that the magnitude of this bias is not large. The dispersion induced in the option price is more significant particularly for parameter values of practical interest. The nature and extent of this dispersion is examined by numerical examples. The paper suggests how a Bayesian approach could be used to cope with the estimation error.     

Computing optimal tax equilibria

This paper proposes a technique for computing optimal taxes in a full general equilibrium model. It is based upon a fixed point algorithm of the type that is widely used to solve Walrasian general equilibrium models. Computing an optimal tax equilibrium is more difficult than solving a general equilibrium model only to the extent that the derivatives of the social welfare function and of the consumer demand functions must be calculated in the former case. Solutions to several sample problems are provided to demonstrate the technique. They suggest that optimal tax rates are exceedingly sensitive to the specification of the model used to derive them.     

Enforced saving as an alternative to taxation policy in the fight against cost inflation

The author argues that an incomes policy with an element of enforced saving could be an effective way of combating cost inflation