Service system design is often informed by queueing theory. Traditional queueing theory assumes that customers are indefinitely patient and servers work at constant speeds. That is reasonable in computer science and manufacturing contexts. However, customers and servers in service systems are people, and, in contrast to jobs and machines, systemic incentives created by design decisions influence their behavior.

First, we study the behavior of strategic servers whose choice of work speed depends on managerial decisions regarding (i) how many servers to staff and how much to pay them, and (ii) whether and when to turn away customers. We develop a game-theoretic many-server Markovian queueing model with a finite or infinite buffer in which the work speeds emerge as the solution to a non-cooperative game. In an asymptotic regime in which demand becomes large and the utility function becomes concave, we establish existence, uniqueness, and monotonicity properties of underloaded, critically loaded, and overloaded equilibria for various regions in the design space. We then extend our model to also incorporate strategic customers’ joining decisions, which endogenously induce a finite buffer. By comparing equilibria where strategic individuals maximize their own utility with those that maximize social welfare or net profit, we characterize the managerial costs of ignoring strategic behavior.