Information Disclosure in Service Platforms: Optimizing for Supply

Information Systems and Operations Management

Speaker : Kostas Bimpikis

Associate professor of Operations, Information and Technology at the Stanford Graduate School of Business

HEC Campus - Jouy-En-Josas - Buil. V - Room Bernard Ramanantsoa

Abstract: Much of the recent literature on information design in two-sided platforms focuses on the role of information disclosure in influencing demand-side decisions. This paper focuses instead on the interaction between information design and supply-side decisions, including supplier entry/exit and pricing. We develop a dynamic model of a two-sided platform that allows us to analyze the long-run implications of alternative information-disclosure policies. Our analysis highlights three main mechanisms through which such a policy improves platform revenues: (i) in cases where the platform is dominant in the market, a downgrading policy helps the platform modulate the composition of suppliers active on the platform, leading to an overall more revenue-efficient set of suppliers; (ii) in cases where the platform is not dominant in the market, a downgrading policy increases the volume of transactions on the platform and, surprisingly, may also result in an increase in the volume of high-quality providers active in the platform; (iii) when commission subsidies are used by the platform to incentivize entry of new providers, a downgrading policy helps the platform achieve equivalent new-provider entry while extracting higher revenue per transaction

Bio:

Kostas Bimpikis is an associate professor of Operations, Information and Technology at the Stanford Graduate School of Business. He received his PhD in Operations Research at MIT working with Daron Acemoglu and Asu Ozdaglar. Before coming to Stanford, he spent a year as a postdoctoral fellow at Microsoft Research New England.