E-Companions to "Should Gig Platforms Decentralize Dispute Resolution?"

33 Pages Posted: 29 Nov 2023

See all articles by Wee Kiat Lee

Wee Kiat Lee

Nanyang Business School, Nanyang Technological University

Yao Cui

Cornell SC Johnson College of Business; Cornell University - Samuel Curtis Johnson Graduate School of Management

Date Written: September 12, 2023

Abstract

Problem definition: Disputes on online labor platforms have traditionally been mediated by the platform itself, which is often viewed as unhelpful or biased. However, there are emerging platforms that promise to resolve disputes with a novel tribunal system and relegate dispute resolution to individual platform users through a voting mechanism. We aim to examine the dispute resolution systems used by traditional platforms (i.e., the centralized dispute system) and emerging platforms (i.e., the decentralized dispute system), in order to assess whether the latter has an advantage over the former. Methodology/results: We use game theory to analyze both the centralized and decentralized dispute systems, and model the tribunal's voting game using the global games framework. Our findings indicate that in order to achieve a fair voting outcome, it is crucial to have sufficient heterogeneity in the assessments of tribunal members. Moreover, the decentralized dispute system outperforms the centralized dispute system only when the freelancer's skill level is sufficiently high. Lastly, the decentralized dispute system has the potential to induce a more socially optimal quality level from the freelancer. Managerial implications: Our findings provide insights on the optimal adoption and implementation of the decentralized dispute system. The decentralized dispute system is more effective for tasks that involve subjective evaluations, and platforms should avoid strategies that homogenize the assessments of tribunal members. Moreover, platforms should consider switching to the decentralized dispute system only if they are able to verify the skill level of freelancers through certification or other means. Lastly, the decentralized dispute system may be more appealing to policy makers due to its potential to induce a more socially optimal outcome.

This paper contains the E-companions for the article "Should Gig Platforms Decentralize Dispute Resolution?".

Keywords: gig economy, dispute management, quality contracting, online labor platform, voting games, global games

JEL Classification: C72, D74, J33, J41, L14, L84

Suggested Citation

Lee, Wee Kiat and Cui, Yao, E-Companions to "Should Gig Platforms Decentralize Dispute Resolution?" (September 12, 2023). Available at SSRN: https://ssrn.com/abstract=4620641 or http://dx.doi.org/10.2139/ssrn.4620641

Wee Kiat Lee (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

Yao Cui

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

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