Hyperbolic Discounting and Queue-Length Information Management for Unpleasant Services that Generate Future Benets

People tend to lack the self control to undergo an unpleasant service that would generate future bene…ts. This paper derives a tractable quasi-hyperbolic discounting model of that behavioral tendency (for queueing systems in which service time is short relative to the time horizon for its bene…ts, and customers observe the queue). People’s lack of self control makes it socially optimal to hide the queue, to prevent people from balking when the line is long. In contrast, people’s lack of self control motivates a pro…t-maximizing system manager to reveal the queue, build less capacity, and charge a higher usage fee, which reduces throughput and hence social welfare. This loss of social welfare from revealing the queue may be even worse when the pro…t-maximizing manager sets capacity but not the usage fee. This suggests, for example, that policy makers should consider prohibiting hospitals from publicizing the Emergency Room queue and waiting time via the internet.