INDUSTRIAL ENGINEERING AND OPERATIONS MANAGEMENT PHD THESIS DEFENSE BY HADI MAHMOUDZADEH

Title: Strategic Customer Behavior in Service Systems: Externalities, Risk Sensitivity and Heterogeneity

Speaker: Hadi Mahmoudzadeh

Time: July 28, 2022 – 14:00

Thesis Committee Members:

Prof. Dr. Fikri Karaesmen (Advisor, Koç University)

Assist. Prof. Pelin Gülşah Canbolat (Co-Advisor, Koç University)

Prof. Dr. Lerzan Örmeci (Koç University)

Assit. Prof. Erhun Özkan (Koç Univesity)

Assoc. Prof. Seçil Savaşaneril (Middle East Technical University)

Assit. Prof. Athanasia Manou (National and Kapodistrian University of Athens)

Abstract:

This thesis considers the analysis of models of service systems where customers are strategic risk-averse and decide whether to join the service system or balk, by taking into account various uncertainties and externalities generated by other potential customers. First, we propose a game-theoretic framework for a static service system with strategic risk-averse customers where we ignore the dynamics of the service system such as random arrivals or random service times and seek capturing the equilibrium joining probabilities in the proposed framework by utilizing other attributes of the service system such as reward, externalities and risk-sensitivity; Next, the pricing problem is presented and analyzed. We then, present an M/M/1 queueing model where similar to the previous static framework, customers are risk-averse and strategic, and address the equilibrium joining behaviour of customers in such a system. We also, come up with a pricing scheme for the service provider and social welfare maximizer. Interestingly, our results indicate the possibility of charging negative prices to achieve socially desired arrival rates with risk-averse strategic customers. Finally, we extend our results to the case where customers are heterogeneous in their risk-sensitivity degree in an M/M/1 model with strategic risk-averse customers.