An Analysis of Search and Authentication Strategies for Online Matching Platforms

Amit Basu (), Sreekumar Bhaskaran () and Rajiv Mukherjee ()
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Amit Basu: Information Technology and Operations Management, Cox School of Business, Southern Methodist University, Dallas, Texas 75275
Sreekumar Bhaskaran: Information Technology and Operations Management, Cox School of Business, Southern Methodist University, Dallas, Texas 75275
Rajiv Mukherjee: Information Technology and Operations Management, Cox School of Business, Southern Methodist University, Dallas, Texas 75275

Management Science, 2019, vol. 67, issue 5, 2412-2431

Abstract: Compared to offline matching markets, online matching platforms improve search in the matching process but at the same time increase the problem of authenticating the features and credentials of prospective matches. This paper examines the interplay between these two processes in online matching, using game-theoretic models. We examine whether an online matching platform should target a broad market of match-seekers or an exclusive group of high-value match-seekers, and how the platform should price its search and authentication services. Our results provide valuable insights for online matching platforms regarding the decision to offer authentication services in addition to search services, and guidelines for the pricing and positioning of these services. For instance, we show that the complementarity of the platform’s optimal pricing for search and authentication services can justify the platform’s offering an authentication service as a loss leader, and that higher-quality authentication services may not always justify higher authentication fees. We also develop guidelines for the platform’s optimal strategies for different market conditions.The online appendix is available at https://doi.org/10.1287/mnsc.2018.3056 . This paper was accepted by Chris Forman, information systems.

Keywords: matching; search; authentication; online markets; pricing; vertical differentiation (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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