Abstract
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 enhanced offline tracking features in 2015. Using a large dataset including 17,827 fixed-price projects and 8,563 hourly projects, we use a difference-indifferences (DID) approach to identify the treatment effect of the implementation of IT-enabled monitoring systems on employer contractor choice, employer surplus and market competition. We found that the IT-enabled monitoring system lowers the employers' preference for high-reputable bidders, and thus reduces the reputation premiums. Meanwhile, comparing the trend of fixed-price projects, the implementation of the monitoring systems increased the number of bids by 17.4% and increased employer surplus in hourly projects by 21.5%. Our result suggests that IT-enabled monitoring systems have a significant effect on alleviating moral hazards, reducing agency costs, and facilitating market competition.
| Original language | English (US) |
|---|---|
| Title of host publication | 2016 International Conference on Information Systems, ICIS 2016 |
| Publisher | Association for Information Systems |
| ISBN (Electronic) | 9780996683135 |
| State | Published - 2016 |
| Event | 2016 International Conference on Information Systems, ICIS 2016 - Dublin, Ireland Duration: Dec 11 2016 → Dec 14 2016 |
Other
| Other | 2016 International Conference on Information Systems, ICIS 2016 |
|---|---|
| Country | Ireland |
| City | Dublin |
| Period | 12/11/16 → 12/14/16 |
Keywords
- Contract choice
- IT policy and management
- Market competition
- Monitoring systems
- Moral hazard problems
- Online labor market
- Reputation systems
ASJC Scopus subject areas
- Information Systems