Customer segmentation and ex ante fairness: A queueing perspective.

This article investigates how customers' perceptions of ex ante unfairness—defined as the anticipated unfairness before service outcomes are realized—impact the design and pricing of priority queueing systems where customers self-select into regular or priority queues by paying an additional fee. Using a stylized M/M/1 queueing model, the study incorporates a negative utility for regular customers proportional to the difference between their expected waiting time and a fairness reference waiting time, typically that of a first come, first served (FCFS) system. The analysis reveals that when customers strongly perceive unfairness, service providers may optimize revenue by either lowering priority fees or offering a single queue to avoid alienating regular customers who might balk (choose not to join). Numerical and analytical results show that the optimal priority fee and queue structure depend critically on the service fee and the intensity of unfairness perception, with higher unfairness potentially reducing overall revenue. Extensions considering alternative fairness reference points and priority customers' fairness perceptions confirm the robustness of these findings, highlighting the importance for service providers to manage customers' fairness perceptions when implementing differentiated queueing and pricing strategies.