An Analysis of Search and Authentication Strategies for Online Matching Platforms

forthcoming in Management Science

67 Pages Posted: 15 Dec 2015 Last revised: 11 Oct 2018

See all articles by Amit Basu

Amit Basu

Southern Methodist University (SMU) - Information Technology and Operations Management Department (ITOM)

Sreekumar R. Bhaskaran

Southern Methodist University (SMU) - Information Technology and Operations Management Department (ITOM)

Rajiv Mukherjee

Southern Methodist University, Cox School of Business

Date Written: January 28, 2018

Abstract

Compared to offline matching markets, online matching platforms improve search in the matching process, but at the same time, increase the problem of authenticating the features and credentials of prospective matches. This paper examines the interplay between these two processes in online matching, using game-theoretic models. We examine whether an online matching platform should target a broad market of match-seekers or an exclusive group of high-value match-seekers, and how the platform should price its search and authentication services. Our results provide valuable insights for online matching platforms regarding the decision to offer authentication services in addition to search services, and guidelines for the pricing and positioning of these services. For instance, we show that the complementarity of the platform’s optimal pricing for search and authentication services can lead to the platform offering an authentication service as a loss leader, and that higher quality authentication services may not justify higher authentication fees. We also develop guidelines for the platform’s optimal strategies for different market conditions.

Keywords: matching, search, authentication, online markets, pricing, vertical differentiation

Suggested Citation

Basu, Amit and Bhaskaran, Sreekumar R. and Mukherjee, Rajiv, An Analysis of Search and Authentication Strategies for Online Matching Platforms (January 28, 2018). forthcoming in Management Science. Available at SSRN: https://ssrn.com/abstract=2686866 or http://dx.doi.org/10.2139/ssrn.2686866

Amit Basu

Southern Methodist University (SMU) - Information Technology and Operations Management Department (ITOM) ( email )

Dallas, TX 75275
United States

Sreekumar R. Bhaskaran (Contact Author)

Southern Methodist University (SMU) - Information Technology and Operations Management Department (ITOM) ( email )

Dallas, TX 75275
United States

Rajiv Mukherjee

Southern Methodist University, Cox School of Business ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

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