Location

Hilton Waikoloa Village, Hawaii

Event Website

www.hicss.hawaii.edu

Start Date

1-4-2017

End Date

1-7-2017

Description

This paper investigates how IT-enabled monitoring systems mitigate moral hazard in an online labor market and their effect on market competition. We exploit a quasi-experiment at Freelancer when it introduced an IT-enabled monitoring system in 2015. We use a difference-in-differences (DID) approach to identify the treatment effect of the monitoring system on employer contractor choice, market competition, and employer surplus. We found that the IT-enabled monitoring system lowers the employers’ willingness to pay the reputation premiums. Meanwhile, comparing the trend of the control group, the IT-enabled monitoring system raised the employer surplus in hourly projects and increased the number of bids. Our result suggests that IT-enabled monitoring systems have a significant effect on alleviating moral hazards, reducing agency costs, and facilitating market competition.

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Jan 4th, 12:00 AM Jan 7th, 12:00 AM

Moral Hazards and Effects of IT-enabled Monitoring Systems in Online Labor Markets

Hilton Waikoloa Village, Hawaii

This paper investigates how IT-enabled monitoring systems mitigate moral hazard in an online labor market and their effect on market competition. We exploit a quasi-experiment at Freelancer when it introduced an IT-enabled monitoring system in 2015. We use a difference-in-differences (DID) approach to identify the treatment effect of the monitoring system on employer contractor choice, market competition, and employer surplus. We found that the IT-enabled monitoring system lowers the employers’ willingness to pay the reputation premiums. Meanwhile, comparing the trend of the control group, the IT-enabled monitoring system raised the employer surplus in hourly projects and increased the number of bids. Our result suggests that IT-enabled monitoring systems have a significant effect on alleviating moral hazards, reducing agency costs, and facilitating market competition.

http://aisel.aisnet.org/hicss-50/cl/sharing_economy/6