Managing Worker Compensation through Wage and Tipping on On-Demand Service Platforms (with Laurens Debo and Raghav Singhal)
It is observed that platform workers' wages have gradually been reducing. Consequently, a substantial portion of platform workers' earnings today comes from customers' tips. In such a system where customers are also involved and bear responsibility in compensating workers, it is unclear how they behave. In this paper, using lab and field experiments, we examine how a platform's dependence on tips to compensate workers affects customers' engagement with the platform, their tipping behavior, the platform's outcomes (such as market coverage and profits), and workers' earnings.
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