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We develop a model for pricing, lead-time quotation and delay compensation ina Markovian make-to-order production or service system with strategic customerswho exhibit risk aversion. Based on a concave utility function of their netbenefit, customers make individual decisions to join the system or balk withoutobserving the state of the queue. The decisions of arriving customers result ina symmetric join/balk game. Regarding the firm's strategy, the providerannounces a fixed entrance fee, a lead-time quotation and a compensation ratefor the part of a customer delay which exceeds the quoted lead-time.  We analyze the effect of customer risk aversion and the compensation policyon the equilibrium join/balk strategies and the resulting input rates, andassess the flexibility of the provider in inducing a range of possible inputrates under various constraints on the pricing/compensation policy. Innumerical experiments we explore the behavior of pricing curves that reflectthe provider's choices in inducing specific input rates. A key insight obtainedfrom the analysis is that a main benefit of the lead-time and compensationoption is to allow the entrance fee to remain high and the provider prefersstrategies that lead to this direction.

Lead-Time Quotations in Unobservable Make-To-Order Systems with Strategic Customers: Risk Aversion, Load Control and Profit Maximization