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Pay, Pat, and Clawback: Incentivizing Service Providers’ Participation in On-Demand Digital Platforms

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  • Niam Yaraghi

    (Business Technology, University of Miami, Coral Gables, Florida 33124; and Center for Technology Innovation, The Brookings Institution, Washington, District of Columbia 20036)

  • Ramaswamy Ramesh

    (Management Science and Systems, University at Buffalo, Buffalo, New York 14260)

  • Giri Kumar Tayi

    (SUNY Albany, Albany, New York 12203)

Abstract

A critical governance challenge for on-demand digital platforms is to increase the participation of their service providers. In this research, we design novel incentive structures by taking the unique features of on-demand digital platforms into account. In 12 micro randomized trials conducted in partnership with a major on-demand digital platform, we examine how combining monetary with nonmonetary incentives and providing them within a loss-aversion framework could motivate service providers to increase their participation levels. We show that in on-demand platforms the nonmonetary incentives inhibit the impact of monetary incentives on service provider participation once they are offered together. Furthermore, in contrast to traditional work settings, offering incentives within a loss-aversion framework only increases the effectiveness of nonmonetary incentives. We provide theoretical explanations and empirical examinations for these counterintuitive results. The insights from this research could be used by on-demand digital platforms to effectively mobilize and sustain their service providers’ participation to meet real-time stochastic demand.

Suggested Citation

  • Niam Yaraghi & Ramaswamy Ramesh & Giri Kumar Tayi, 2025. "Pay, Pat, and Clawback: Incentivizing Service Providers’ Participation in On-Demand Digital Platforms," Management Science, INFORMS, vol. 71(9), pages 7579-7599, September.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:9:p:7579-7599
    DOI: 10.1287/mnsc.2023.02603
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