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Courteous or Crude? Managing User Conduct to Improve On-Demand Service Platform Performance

Author

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  • Yunke Mai

    (Gatton College of Business and Economics, University of Kentucky, Lexington, Kentucky 40506)

  • Bin Hu

    (Naveen Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080)

  • Saša Pekeč

    (Fuqua School of Business, Duke University, Durham, North Carolina 27708)

Abstract

In this paper, we study how an on-demand service platform could improve its performance through managing user conduct. In such a platform, service providers may reject certain platform-proposed service requests, and their responses, in turn, incentivize users to adjust their conduct. We develop an evolutionary game theory model of user conduct and provider responses that shows that the platform could improve user conduct through either setting a low wage for service providers or implementing priority matching. Building upon these results, we further model providers and users joining and leaving the platform by once again utilizing the evolutionary game theory approach. We find that wage setting alone is a blunt instrument to improve platform performance via managing user conduct, whereas supplementing the wage decision with priority matching could overcome its limitations and serve as an effective strategy to further improve platform performance in terms of growth and profitability. This finding suggests that matching prioritization could be an important strategy for managing platforms with user and provider heterogeneities. In addition, our analysis and results also demonstrate the potential of the evolutionary game theory approach for analyzing the impact of pricing and matching decisions on the performance of large markets.

Suggested Citation

  • Yunke Mai & Bin Hu & Saša Pekeč, 2023. "Courteous or Crude? Managing User Conduct to Improve On-Demand Service Platform Performance," Management Science, INFORMS, vol. 69(2), pages 996-1016, February.
    • Handle: RePEc:inm:ormnsc:v:69:y:2023:i:2:p:996-1016
    DOI: 10.1287/mnsc.2022.4391
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