An Empirical Study of Project Schemes in Online Labor Platforms

The prevalence of online labor markets allows employers to publish projects through the platforms and attract service providers across the globe. The employers can choose to publish their projects adopting either a contract-based scheme or a contest-based scheme. In this paper, we empirically (a) compare the contract-based and contestbased projects to identify which scheme is superior in terms of attracting service providers' participation; and (b) examine how the effect of project value on service providers' participation differs in these two schemes. We integrate a unique data set from a leading online labor platform, including 22,207 contract-based projects and 14,861 contest-based projects to conduct the within-site comparison. Our results show that publishing projects as a contract-based scheme can help employers to attract more service providers. Furthermore, project value and service providers' participation are positively related in contest-based projects, while they exhibit an inverted U-shape relationship in contract-based projects. We explain and discuss the mechanisms underlying these effects and highlight implications for different stakeholders in online labor markets.