6 June 2025 - 6 June 2025
1:00PM - 2:30PM
Durham University Business School, Waterside Building
Free
Hosted by the Centre for Strategy, Technological Innovation and Operations (CSTIO)
Abstract
We analyze a type of platform common in the service sector, where customers can freely post tasks, and service providers pay a fee to purchase job leads and unlock the ability to communicate with these customers. We adopt a Bayesian persuasion framework to explore how the platform can leverage its informational advantage about the provider base and pricing to strategically influence the decisions of service providers, aiming to maximize its revenue. We begin the analysis by assuming that prices are exogenously given and characterize the structure of the optimal signaling mechanism. Specifically, the platform recommends that all service providers participate when the pool size is below a certain threshold. When the pool size exceeds this threshold, the platform randomizes its recommendations between two consecutive numbers, independent of the pool size. This behavior is driven by a unique feature of our model, where the beliefs of the platform and service providers are non-identical: a provider's knowledge of their own participation inflates their belief about the total number of service providers. Next, we endogenize the platform’s pricing decision and consider the policy space where the signaling mechanism and (possibly randomized) state-dependent pricing are jointly optimized. Notably, within this space, we find that the optimal signaling mechanism with fixed pricing is optimal. This result implies the superiority of the optimal signaling mechanism over the commonly adopted contingent pricing policy. We show that the performance discrepancy between these two policies is particularly pronounced when supply competition is intense.
About the speaker
Jiahua Wu is an Associate Professor of Operations at Imperial Business School, Imperial College London. He received his Ph.D. in Operations Management from Rotman School of Management, University of Toronto. He also holds a Master in Electrical and Computer Engineering from University of Toronto, and a Bachelor in Electronic Engineering from Tsinghua University. Jiahua's research interests include platform operations, revenue management, and mechanism design.