The Dual Effects of Team Contest Design on On-Demand Service Work Schedules

37 Pages Posted: 11 Aug 2021 Last revised: 5 May 2022

See all articles by Tingting Dong

Tingting Dong

Harbin Institute of Technology, Department of Transportation Engineering

Xiaotong Sun

The Hong Kong University of Science and Technology (Guangzhou); Hong Kong University of Science and Technology - School of Engineering

Qi Luo

Clemson University, Department of Industrial Engineering

Jian Wang

Harbin Institute of Technology

Yafeng Yin

University of Michigan, Ann Arbor

Date Written: July 14, 2021

Abstract

Emerging on-demand service platforms (OSPs) have recently embraced teamwork as a strategy for stimulating workers' productivity and mediating temporal supply and demand imbalances. This research investigates the team contest scheme design problem considering work schedules.
Introducing teams on OSPs creates a hierarchical single-leader multi-follower game. The leader (platform) establishes rewards and intra-team revenue-sharing rules for distributing workers' payoffs. Each follower (team) competes with others by coordinating the schedules of its team members to maximize the total expected utility. The concurrence of inter-team competition and intra-team coordination causes dual effects, which are captured by an equilibrium analysis of the followers’ game. To align the platform's interest with workers' heterogeneous working-time preferences, we propose a profit-maximizing contest scheme consisting of a winner's reward and time-varying payments. A novel algorithm that combines Bayesian optimization, duality, and a penalty method solves the optimal scheme in the non-convex equilibrium-constrained problem. Our results indicate that teamwork is a useful strategy with limitations. Under the proposed scheme, team contest always benefits workers. Intra-team coordination helps teams strategically mitigate the negative externalities caused by over-competition among workers. For the platform, the optimal scheme can direct teams' schedules toward more profitable market equilibria when workers have inaccurate perceptions of the market.

Keywords: On-demand service platforms, Team competition, Payment scheme design, Quasi-variational inequality

Suggested Citation

Dong, Tingting and Sun, Xiaotong and Luo, Qi and Wang, Jian and Yin, Yafeng, The Dual Effects of Team Contest Design on On-Demand Service Work Schedules (July 14, 2021). Available at SSRN: https://ssrn.com/abstract=3886735 or http://dx.doi.org/10.2139/ssrn.3886735

Tingting Dong

Harbin Institute of Technology, Department of Transportation Engineering ( email )

China

Xiaotong Sun

The Hong Kong University of Science and Technology (Guangzhou) ( email )

18665714179 (Phone)

HOME PAGE: http://xiaotongsun.com

Hong Kong University of Science and Technology - School of Engineering ( email )

Guangzhou, Guangdong
China

Qi Luo (Contact Author)

Clemson University, Department of Industrial Engineering ( email )

Jian Wang

Harbin Institute of Technology ( email )

Heilongjiang
China
0451-86282840 (Phone)
0451-86412866 (Fax)

HOME PAGE: http://homepage.hit.edu.cn/wangjian2012 copy

Yafeng Yin

University of Michigan, Ann Arbor ( email )

2350
Hayward Street
Ann Arbor, MI 48109
United States

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