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Platform exploitation in the sharing economy

Abhinav Anand, Souvik Dutta, and Prithwiraj Mukherjee
Journal Name
Operations Research Letters
Journal Publication
others
Publication Year
2023
Journal Publications Functional Area
Finance & Accounting
Publication Date
Vol. 51(1), January 2023, Pg. 47-53
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.

Platform exploitation in the sharing economy

Author(s) Name: Abhinav Anand, Souvik Dutta, and Prithwiraj Mukherjee
Journal Name: Operations Research Letters
Volume: Vol. 51(1), January 2023, Pg. 47-53
Year of Publication: 2023
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.