Social Comparison and Platform Governance: Essays on Topics of the Digital Economy

This dissertation explores two key dimensions of the digital economy: how individuals adjust their behavior in response to social comparisons, and how online platforms govern markets through fees and pricing policies. Chapter 1 investigates the role of peer comparisons in risk-taking using two online experiments. I show that when individuals observe peers earning more than themselves, they become more willing to take risks—even when their relative ranking cannot change. This effect is driven by the mere presence of peer earnings, rather than the possibility of overtaking or falling behind. The findings highlight how social comparison can systematically distort economic decision-making. Chapters 2 and 3 turn to theoretical analyses of platform governance in two-sided markets. Chapter 2 shows that fee structures crucially shape seller collusion. In particular, higher per-unit fees can stabilize collusion by discouraging deviation, allowing platforms to profit indirectly from reduced competition. However, network effects complicate this incentive: stronger buyer demand makes collusion less attractive, pushing platforms to lower fees. This implies that established platforms with weaker network effects are more prone to sustaining collusion than growing ones. Chapter 3 examines how platforms can use non-binding price recommendations to influence sellers. When sellers face menu costs, recommendations can eliminate frictions and improve efficiency. Yet the outcome depends on the platform’s fee structure: under per-unit fees, recommendations promote lower prices, more trade, and higher welfare; under membership fees, they may instead support supracompetitive pricing at buyers’ expense, resembling resale price maintenance. Thus, recommendations can serve as a coordination device that either fosters efficiency or facilitates price manipulation.