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Market Design for HCI: Successes and Failures of Peer-to-Peer Exchange Platforms / Airi Lampinen & Barry Brown

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Paper presentation at CHI 2017 conference.

Abstract below. Full paper available at the ACM Digital Library (http://dl.acm.org/citation.cfm?doid=3025453.3025515) and as a freely accessible preprint (http://mobilelifecentre.org/sites/default/files/chi%202017%20market%20design.pdf)

For further publications, see: airilampinen.fi/publications

"This paper explores an HCI approach to designing markets, with a primary focus on peer-to peer exchange platforms. We draw on recent work in economics that has documented how markets function, how they can be evaluated, and what can be done to fix them when they fail. We introduce five key concepts from market design: thickness, congestion, stability, safety, and repugnance. These lend HCI an analytic vocabulary for understanding why markets may succeed or struggle. Building on prior empirical work, we apply these concepts to compare two well-known network hospitality platforms, Couchsurfing and Airbnb. As a second illustrative case, we use market design to shed light on the challenges experienced by smaller-scale peer-to-peer marketplaces for lending, renting, and selling physical goods. To conclude, we discuss how this kind of analysis can make conceptual, evaluative, and generative contributions to the study and design of exchange platforms and other socio-technical systems."

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Market Design for HCI: Successes and Failures of Peer-to-Peer Exchange Platforms / Airi Lampinen & Barry Brown

  1. 1. M A R K E T D E S I G N F O R H C I 
 S U C C E S S E S A N D FA I L U R E S O F 
 P E E R - T O - P E E R E X C H A N G E P L AT F O R M S Airi Lampinen and Barry Brown Mobile Life Centre, Stockholm University {airi, barry}@mobilelifecentre.org
  2. 2. • What might HCI gain from 
 engaging with market design? • How can market design 
 help us understand successes 
 and failures of peer-to-peer 
 exchange platforms? H C I A N D M A R K E T S
  3. 3. • A branch of economics focusing 
 on how to create, operate, 
 evaluate, and fix markets • Five key concepts: thickness, congestion, safety, stability, repugnance M A R K E T D E S I G N
  4. 4. 1 W H Y M A R K E T S I N H C I ?
  5. 5. • Markets as human artifacts – actively designed and shaped, not free-standing or naturally occuring • Matching markets – relation-specific, price is not the only determinant & do not always involve money • Rather than commodity markets that are impersonal and driven by price W H AT K I N D S O F M A R K E T S ?
  6. 6. • Auctions and commodity markets 
 Resnick & al, 2000; Resnick & Zeckhauser, 2002 • Game markets and virtual economies 
 Lehdonvirta & Castronova, 2014 • Business-to-business markets
 Kollock & Russell Braziel, 2006 O N L I N E M A R K E T S
  7. 7. • Crowdsourcing
 Kulkarni et al, 2012; Dow et al, 2012, 
 Irani & Silberman, 2013; Salehi et al 2015 • On-demand labour
 Teodoro et al, 2014; Thebault-Spieker, 2015; 
 Raval & Dourish, 2016; Rosenblat & Stark. 2016 • Peer-to-peer exchange
 Suhonen et al 2010; Bellotti et al 2014; 
 Ikkala & Lampinen, 2015; Malmborg & al, 2015 C R O W D S O U R C I N G A N D P 2 P E X C H A N G E P L AT F O R M S
  8. 8. 2 K E Y C O N C E P T S & C A S E S T U D Y
  9. 9. • Focus on smaller peer-to-peer marketplaces 
 that enable lending, renting, and selling physical goods • Persistent fascination with local or niche exchange arrangements – yet so far, halting success P E E R - T O - P E E R M A R K E T P L A C E S 
 F O R P H Y S I C A L G O O D S
  10. 10. • Not only a matter of ‘mass’ in terms of
 raw number of participants but 
 the number of potential matches • A temporal issue: for a market to work effectively, many people need to participate at the same time T H I C K N E S S
  11. 11. • Timing: Bringing together the two sides of the market • Social proof: Perceptions matter • Number of potential matches: Likelihood for successful exchanges are higher if participants can swap sides in the marketplace T H I C K N E S S
  12. 12. • A problem resulting from success: achieving thickness creates the risk of congestion • A situation where participants are not able to review enough relevant options in a timely manner to arrive at beneficial transactions C O N G E S T I O N
  13. 13. • Facilitating participants’ efforts to negotiate and complete exchange • Risk of negotiations not resulting in an exchange – lost time and missed alternative opportunities • Risk of outdated information, especially if participants opt for alternative markets C O N G E S T I O N
  14. 14. • Having the market organised so that participants can make decisions based on reliable information • Being able to state preferences honestly without fearing harm • Signalling: reliable and comprehensive information is key for successful matches S A F E T Y
  15. 15. • Risk of disintermediation: transacting outside of the marketplace • The geographically local nature of a marketplace can make the cost of meeting in-person low • Invisible exchanges lead to missing reputational information S A F E T Y
  16. 16. • Transactions that are objected to based on values and morals • Sometimes the involvement of money 
 turns otherwise acceptable transactions repugnant (objectification & coercion) • The repugnance of a market depends 
 on context and on who is judging R E P U G N A N C E
  17. 17. 3 A P P LY I N G M A R K E T D E S I G N 
 I N H C I
  18. 18. • Encouraging participants 
 to try multiple roles • Addressing temporal aspects 
 of markets (e.g. surge mechanisms?) • Making it easier for participants to 
 pull friends to the market by 
 proposing potential matches I D E A S F O R D E S I G N : 
 T H I C K N E S S
  19. 19. • What hinders effectiveness? What trade-offs does improving effectiveness entail? • The most effective solution may not be what best serves the values of a marketplace • Exchange platforms are not powerless to shape outcomes among participants C O N S I D E R I N G A LT E R N AT I V E S
  20. 20. “As we start to understand better 
 how markets and marketplaces work, 
 we realize that we can intervene in them, 
 redesign them, 
 fix them when they’re broken, 
 and start new ones where they will be useful.” –Roth, 2015 C O N C L U S I O N

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