A method, system and program are provided for dynamically assigning priority values to instruction threads in a computer system based on one or more predetermined thread performance tests, and using the assigned instruction priorities to determine how resources are used in the system. By storing the assigning priority values for each thread as a tag in the thread's instructions, tagged instructions from different threads that are dispatched through the system are allocated system resources based on the tagged priority values assigned to the respective instruction threads. Priority values for individual threads may be updated with control software which tests thread performance and uses the test results to apply predetermined adjustment policies. The test results may be used to optimize the workload allocation of system resources by dynamically assigning thread priority values to individual threads using any desired policy, such as achieving thread execution balance relative to thresholds and to performance of other threads, reducing thread response time, lowering power consumption, etc.