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We report the results of a field experiment in which treated employers could not observe the compensation history of their job applicants. Treated employers responded by evaluating more applicants, and evaluating those applicants more intensively. They also responded by changing what kind of workers they evaluated: treated employers evaluated workers with 7% lower past average wages and hired workers with 16% lower past average wages. Conditional upon bargaining, workers hired by treated employers struck better wage bargains for themselves. Using a structural model of bidding and hiring, we find that the selection effects we observe would also occur in equilibrium.

In this study, we examine how firms use the big data capabilities of third-party platforms to find transaction partners. Although use of the platform’s big data capabilities creates value by lowering search costs, firms may capture little of this value if they become entirely dependent on the platform. We argue that firms invest in strategic redundancy, that is, they continue to rely partly on their internal screening capabilities to identify partners so as to maintain their bargaining power relative to the platform. We further predict that this reliance on internal screening is greater the lower the relative advantage of the platform’s big data capabilities and the more salient the threat to the firm’s bargaining power. We test these predictions in the context of an online labor platform, using a regression discontinuity design to examine the effect of the platform’s recommendations on the firm’s decision to hire an applicant. Consistent with our theory, we find that firms’ use of the platform’s recommendations is lower in later stages of the hiring process, in larger submarkets, and for firms with greater experience on the platform. Our study sheds new light on how firms make use of (third-party) big data techniques, showing that firms may strategically choose to limit such use in order to maintain independence.

Platform marketplaces can potentially steer buyers to certain sellers by recommending or guaranteeing those sellers. Money-back guarantees—which create a direct financial stake for the platform in seller performance—might be particularly effective at steering as they align buyer and platform interests in creating a good match. We report the results of an experiment in which a platform marketplace—an online labor market—guaranteed select sellers for treated buyers. The presence of a guarantee strongly steered buyers to these guaranteed sellers, but offering guarantees did not increase sales overall, suggesting financial risk was not determinative for the marginal buyer. This preference for guaranteed sellers was not the result of their lower financial risk, but rather because buyers viewed the platform’s decision to guarantee as informative about relative seller quality. Indeed, a follow-up experiment showed that simply recommending the sellers that the platform would have guaranteed was equally effective at steering buyers. This paper was accepted by Chris Forman, information systems.

We report the results of a field experiment in which treated employers could not observe the compensation history of their job applicants. Treated employers responded by evaluating more applicants, and evaluating those applicants more intensively. They also responded by changing what kind of workers they evaluated: treated employers evaluated workers with 7% lower past average wages and hired workers with 16% lower past average wages. Conditional upon bargaining, workers hired by treated employers struck better wage bargains for themselves. Using a structural model of bidding and hiring, we find that the selection effects we observe would also occur in equilibrium.

Marketplaces such as online labor markets are often in a position to provide agents with public certified information to facilitate trade. I examine how employers on oDesk.com, the world's largest online marketplace, use public information in hiring. By experimentally varying employers' access to applicants' past wage rates, I demonstrate that market provided cheap-to-observe signals of quality are used by employers as substitutes for costly search and screening. I show that when employers are searching for someone low skilled then the provision of coarse information from the market is sufficient and employers will not pay a cost to acquire more information. When employers are looking for someone high skilled they will pay fixed screening costs to acquire information beyond what is provided by the platform. If the coarse information is not provided by the marketplace, then even employers looking for unskilled labor will pay to acquire more information. This leads to more matches and hiring quality workers at a lower price. However, the cost savings from identifying and hiring these low cost, but high quality workers does not outweigh the upfront cost of information acquisition.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We report the results of a field experiment in which treated employers could not observe the compensation history of their job applicants. Treated employers responded by evaluating more applicants, and evaluating those applicants more intensively. They also responded by changing what kind of workers they evaluated: treated employers evaluated workers with 7% lower past average wages and hired workers with 16% lower past average wages. Conditional upon bargaining, workers hired by treated employers struck better wage bargains for themselves. Using a structural model of bidding and hiring, we find that the selection effects we observe would also occur in equilibrium. Terms of use: Documents inJEL-Codes: J010, J300, M500, M510.