Measuring Strategic Behavior by Gig Economy Workers: Multihoming and Repositioning

31 Pages Posted: 25 Apr 2023

See all articles by Gad Allon

Gad Allon

University of Pennsylvania - The Wharton School

Daniel Chen

University of Pennsylvania - The Wharton School

Ken Moon

University of Pennsylvania - The Wharton School

Date Written: April 17, 2023

Abstract

Gig economy workers make strategic decisions about where and when to work. These decisions are central to gig economy operations and are important policy targets both to firms that operate ridehail and delivery platforms and to regulators that oversee labor markets. We collaborate with a driver analytics company to empirically measure two types of strategic behavior: multihoming, an online change between platforms, and repositioning, a physical change between locations. Using a comprehensive dataset that tracks worker activity across platforms, we estimate a structural model to analyze how workers optimize their earnings and respond to earnings-based incentives to switch platforms or locations. We show that workers are highly heterogeneous in their preferences and find multihoming especially costly, both in absolute terms and relative to the cost of repositioning. Through counterfactual simulations, we show that firms and regulators can substantially improve system efficiency by enabling workers to freely multihome: workers' hourly earnings increase by 2.0% and service levels increase by 53.1%. In contrast, the existing equilibrium is similar to a system without multihoming, in which hourly earnings increase by 1.3% but service capacity decreases by 4.1%. Additionally, we show that policies to limit traffic congestion by increasing travel costs should include incentives to ensure that workers remain able to efficiently reposition. An increase to repositioning costs by $1 per mile increases hourly earnings by 2.3% but substantially decreases service capacity by 29.6%.

Keywords: Empirical operations, gig economy, behavioral operations, structural estimation, online platforms

Suggested Citation

Allon, Gad and Chen, Daniel and Moon, Ken, Measuring Strategic Behavior by Gig Economy Workers: Multihoming and Repositioning (April 17, 2023). Available at SSRN: https://ssrn.com/abstract=4411974 or http://dx.doi.org/10.2139/ssrn.4411974

Gad Allon

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Daniel Chen (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Ken Moon

University of Pennsylvania - The Wharton School ( email )

Jon M. Huntsman Hall
3730 Walnut St.
Philadelphia, PA 19104-6365
United States

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