First Ranked First To Serve: Strategic Agents in a Service Contest

Abstract

Motivated by two-sided marketplaces and work-from-home call centers which crowdsource demand to a pool of freelance agents, we model a service provider whose agents endogenously determine their participation and effort level. To motivate agents, the marketplace ranks agents in a prespecified number of priority classes based on their relative performance. Agents' idle time is not compensated and higher performers are utilized (and hence are paid) more. We study which priority class structure creates the best incentives for agents' participation and effort and we show that the optimal design of such a “service contest” is often coarse, namely, it contains only a few priority classes. Discarding available information on agents' relative rankings, or, deploying coarser priority classes, can paradoxically provide higher incentives for agents' participation and for marketplace performance.

About the presenter

Konstantinos (Kosta) Stouras is a PhD Candidate in Operations Management at INSEAD Business School supervised by Prof. Serguei Netessine and Prof. Karan Girotra. He received a Master Degree in Financial Engineering as well as a Bachelor Degree in Applied Mathematics, both from the National Technical University of Athens (NTUA). His research is concerned with designing incentive schemes for service systems with on demand capacity. Currently, he is focusing on managing capacity and service quality for two innovative business models to provide service—virtual call centers and online product support forums.

More info about Konstantinos Stouras

About the Seminar

The KLU research seminar series is a regular meeting of PhD students, Post-Docs and professors who conduct research in the field of logistics and supply chain management. The research seminar is open to the public and we happily welcome guests.