Queuing for Expert Services

We consider a monopolist expert offering a service with a `credence' characteristic. A credence service is one where the customer cannot verify, even after a purchase, whether the amount of prescribed service was appropriate or not; examples include legal, medical or consultancy services and car repair. This creates an incentive for the expert to `induce service', that is, to provide unnecessary services that add no value to the customer, but that allow the expert to increase his revenues. We focus on the impact of an operations phenomenon on service inducement - workload dynamics due to the stochasticity of inter-arrival and service times. To this end, we model the expert's service operation as a single-server queue. The expert determines the service price within a fixed and variable fee structure and determines the service inducement strategy. We characterize the expert's combined optimal price structure and service inducement strategy as a function of service ca...

• Type: Journal
• Year: 2008
• Where: MANSCI
• Authors: Laurens G. Debo, L. Beril Toktay, Luk N. Van Wassenhove
• Keywords: Expert, MANSCI 2008, Service Inducement, Service Inducement Strategy