Provider experience and order selection in the sharing economy

Abstract

The sharing economy, enabled by digital platforms, which connect providers and consumers for peer-to-peer exchanges, experienced rapid growth in recent years. Although researchers attempted to explore the societal or business impact of the sharing economy market, little is known about how individual providers operate their businesses, given that providers are capacity-constrained, self-scheduled and unprofessional. In this study, we are interested in the relationship between experience and providers' order selection behaviours. Leveraging a rich and proprietary dataset from a large sharing economy platform—which facilitates the exchanges of home-cooked meals in China—and employing multiple identification strategies and estimation methods, we find that the number of orders declined by a provider first increases with their experience, but later decreases. However, their sales revenue keeps increasing with experience. Our investigation further reveals that this happens because providers adjust their order selection strategies at different experience levels to achieve higher revenue in the sharing economy. Our study is among the pioneering studies to empirically understand providers' market behaviours in the sharing economy and offers important practical implications.