Working Paper: NBER ID: w19852
Authors: Daron Acemoglu; Mohamed Mostagir; Asuman Ozdaglar
Abstract: Crowdsourcing is an emerging technology where innovation and production are sourced out to the public through an open call. At the center of crowdsourcing is a resource allocation problem: there is an abundance of workers but a scarcity of high skills, and an easy task assigned to a high-skill worker is a waste of resources. This problem is complicated by the fact that the exact difficulties of innovation tasks may not be known in advance, so tasks that require high-skill labor cannot be identified and allocated ahead of time. We show that the solution to this problem takes the form of a skill hierarchy, where tasks are first attempted by low-skill labor, and high-skill workers only engage with a task if less skilled workers are unable to finish it. This hierarchy can be constructed and implemented in a decentralized manner even though neither the difficulties of the tasks nor the skills of the candidate workers are known. We provide a dynamic pricing mechanism that achieves this implementation by inducing workers to self select into different layers. The mechanism is simple: each time a task is attempted and not finished, its price (reward upon completion) goes up.
Keywords: crowdsourcing; innovation; resource allocation; skill hierarchy; dynamic pricing
JEL Codes: D20; D83; L22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| crowdsourcing can be organized effectively despite unknown task difficulties and worker skills (O36) | structured skill hierarchy can enhance task completion efficiency (L23) |
| lower-skilled workers attempt tasks first, higher-skilled workers step in only if tasks are not completed (J29) | overall efficiency of task allocation improves (D61) |
| dynamic pricing mechanism increases rewards for uncompleted tasks (D47) | induces self-selection among workers (J29) |
| self-selection among workers (J29) | higher-skilled workers are incentivized to wait for more challenging tasks (J29) |
| pricing mechanism allows for decentralized implementation of optimal matching of tasks to workers (D47) | task assignment is optimized (C78) |