Design of Information Sharing Mechanisms in Service Systems

Friday, October 5, 2018 - 11:00am - 11:45am
Keller 3-180
Krishnamurthy Iyer (Cornell University)
In many online marketplaces and service systems, there is an informational asymmetry between the platform operators and the
users of the system: users often have much less information than is available to the operators. Since information directly affects
user behavior, a natural question is how should a platform share information with users in order to achieve system-wide goals. I
will study this question in the context of a service system serving delay-sensitive customers. The strategic customers do not a priori know their waiting times, and the service provider seeks to share information to maximize throughput (and hence revenue). Using the methodology of information design, I will characterize the structure of the optimal signaling mechanism, and compare its revenue-performance with that under optimal dynamic pricing. Finally, I will discuss how the methodology can be extended to settings where customers exhibit risk-aversion.