Effects of IT-enabled monitoring systems in online labor markets

Chen Liang, Yili Hong, Bin Gu

Research output: Chapter in Book/Report/Conference proceedingConference contribution

4 Scopus citations

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 languageEnglish (US)
Title of host publication2016 International Conference on Information Systems, ICIS 2016
PublisherAssociation for Information Systems
ISBN (Electronic)9780996683135
StatePublished - 2016
Event2016 International Conference on Information Systems, ICIS 2016 - Dublin, Ireland
Duration: Dec 11 2016Dec 14 2016

Other

Other2016 International Conference on Information Systems, ICIS 2016
CountryIreland
CityDublin
Period12/11/1612/14/16

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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

Cite this

Liang, C., Hong, Y., & Gu, B. (2016). Effects of IT-enabled monitoring systems in online labor markets. In 2016 International Conference on Information Systems, ICIS 2016 Association for Information Systems.