Strategically Seeking Service: How Competition Can Generate Poisson Arrivals

Abstract

We consider a simple game in which strategic agents select arrival times to a service facility. Agents find congestion costly and, hence, try to arrive when the system is underutilized. Working in discrete time, we characterize pure-strategy Nash equilibria for the case of ample service capacity. In this case, agents try to spread themselves out as much as possible and their self-interested actions will lead to a socially optimal outcome if all agents have the same well-behaved delay cost function. For even modest sized problems, the set of possible pure-strategy Nash equilibria is quite large, making implementation potentially cumbersome. We consequently examine mixed-strategy Nash equilibria and show that there is a unique symmetric Nash equilibrium. Not only is this equilibrium independent of the number of agents and their individual delay cost functions, the arrival pattern it generates approaches a discrete-time Poisson process as the number of agents and arrival points gets large. Our results extend to the case of time varying preferences. With an appropriate initialization, the results also extend to a system with limited capacity. Our model lends support to the traditional literature on managing service systems. This work has generally ignored customers strategically choosing arrival times. Rather it is commonly assumed that customers seek service according to some well-behaved process (e.g., that interarrival times follow a renewal process). We show that assuming Poisson arrivals is an acceptable assumption even with strategic customers if the population is large and the horizon is long.