Efficiency of Digital Enabled Business Platforms: a Perspective from Understanding User Behavior

University of Minnesota Ph.D. dissertation. April 2017. Major: Business Administration. Advisors: Ravi Bapna, Alok Gupta. 1 computer file (PDF); vi, 98 pages.Abstract: Advancements in information technology give birth to a wide variety of digital enabled business platforms. Commonly used online platforms range from online auction sites to mobile gaming apps. Users’ bidding strategies and gaming behavior under these particular online settings are quite different from those under the traditional scenarios. This dissertation empirically examines user behavior in two digital enabled platform scenarios, namely, the eBay auctions site and a social mobile game app. I aim to understand the impact of online user behavior on the platform efficiency as well as how platform settings affect usage outcome. In my first essay, I address the impact of bidders’ use of the sniping strategy on the efficiency of the eBay auction site by looking at the bidder welfare. Using a unique data set that contains the full bidding history for Xbox 360 consoles on eBay over a period of 5 years, I was able to examine the impact of sniping strategy on auction prices and bidder surplus. The key results indicate that contrary to popular belief, snipers may not be bargain hunters. Rather, they are value shoppers and often pay higher prices as compared to non-snipers. But overall, bidders do benefit from snipping as they get higher surplus. The results also indicate that higher prices due to higher reputation, a well-established result in the literature, are mediated by attracting snipers and/or higher number of bidders in an auction. Finally, I find evidence that bidders’ strategic behavior becomes more evident at a higher stake value. These findings show that the sniping strategy not only improves the bidder welfare by increasing their winning surplus, but also the increased auction ending price is indicative of increased seller welfare. Thus, the use of sniping strategy by bidders actually increases the total efficiency of the eBay auction platform. In my second essay, I explore the efficacy of crowdsourcing features on enhancing user engagement and retention in the context of mobile gaming apps. To do so, I examine two specific crowdsourcing features, namely, the ability to contribute content and the ability to access crowdsourced content. Under a 2×2 factorial design, I assess the impact of these crowdsourcing features on usage outcomes via a randomized field experiment. In our experiment, I also examine the underlying mechanisms that lead to the main observed effects. Interestingly, I find that even without contributing content, users exhibited heightened user engagement and retention when they are given the option to contribute gaming content to the app. Results also show that the positive effect of content access on user retention only materializes when users are actually exposed to crowdsourced content. In particular, results show that the content contribution feature reduces users’ hazard of ending a session and abandoning the app by 11% and 14% respectively. Moreover, the largest improvement in user retention is achieved when users are able to contribute content and view crowdsourced content from the community. Finally, I find heterogeneous treatment effects in our study setting: crowdsourcing features tend to enhance the retention of heavy game players, while they heighten the engagement level of casual gamers