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Platform Exploitation in the Sharing Economy

Abhinav Anand, Souvik Dutta and Prithwiraj Mukherjee
2022
Working Paper No
673
Body

We model a revenue sharing contract between a sharing economy platform and a freelance service provider, where the latter hides revenue from the former by canceling some assignments and performing them for cash (\platform exploitation"). The platform counters this via costly, imperfect audits with endogenous success probability, and a variable payment. We show that at equilibrium, all agent types except the highest, indulge in revenue falsification. This problem is exacerbated by the principal's ability to extract restitution from the agent.

Key words
Platform exploitation; sharing economy; contract theory; optimal control
WP No. 673.pdf (571.69 KB)

Platform Exploitation in the Sharing Economy

Author(s) Name: Abhinav Anand, Souvik Dutta and Prithwiraj Mukherjee, 2022
Working Paper No : 673
Abstract:

We model a revenue sharing contract between a sharing economy platform and a freelance service provider, where the latter hides revenue from the former by canceling some assignments and performing them for cash (\platform exploitation"). The platform counters this via costly, imperfect audits with endogenous success probability, and a variable payment. We show that at equilibrium, all agent types except the highest, indulge in revenue falsification. This problem is exacerbated by the principal's ability to extract restitution from the agent.

Keywords: Platform exploitation; sharing economy; contract theory; optimal control
WP No. 673.pdf (571.69 KB)