HEC Research Papers Series,
HEC Paris

Abstract: In manufacturing and service operations, flexibility is beneficial for matching supply with demand, but it comes at a cost. In modern digital workplaces, agents possess a spectrum of different skills associated with corresponding and variable task preferences: Some are inclined to give up part of their payment to avoid unfavorable matches. The platform manager, in turn, gains extra freedom in allocating tasks by possibly charging servers for a favorable assignment. Innovative marketplaces facilitate task discretion and seek for novel and beneficial implementations in the platform design. This naturally leads to the problem of exploring and optimizing the task allocation process. We introduce an innovative mechanism for task assignment in the workplace, and compare it against the traditional one where task routing is solely the platform's decision. To improve all users' welfare, agents are allowed some task discretion in exchange for a fee. We model different working environments and servers' preferences via different distributions, and we study how the agents' preferences, the task cost, and the flexibility fee, affect the equilibrium assignment. In a multi-server system, a server may request autonomy and choose the costly-to-the-platform option, considering the other agents’ behavior. Thereupon, it may or may not be beneficial for the platform when the agents' and the platform's preferences are misaligned. In every case, by pricing and offering flexibility the platform can do at least as well as the no-flexibility scheme. An important conclusion is that pricing task discretion can often improve the agents' welfare and the labor platform's profit.

Keywords: digital marketplaces; task discretion; autonomy; strategic servers; queues; pricing flexibility

JEL-codes: O14

49 pages, August 13, 2019

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