Determinants of Open Contest Participation in Online Labor Markets

Abstract

Enabled by advances in information and communications technologies, open contests in online labor markets allow employers (individuals and companies of any size) to access a large pool of labor, thus creating an efficient alternative for sourcing labor globally with significantly lower costs compared to traditional markets. Given the importance of increasing the number of contestants in contests for labor to obtain better solutions, this paper examines the key factors that increase labor participation in open contests based on data from an online labor market. Employers benefit from more contestants since a larger pool of participants brings a more diverse set of ideas and potentially better quality solutions. We propose three categories of factors that affect participation in open contests: (1) contest design parameters (prize, duration, description length), (2) market environment factors (competition intensity and market price), and (3) project intrinsic characteristics (project complexity and project type). Our results stress the importance of market environment factors in shaping the number of participants in open contests in online labor markets beyond contest design parameters. Notably, we show that the proposed determinants are moderated by project type (ideation versus expertise), stressing the importance of distinguishing between types of projects that require different job skills. Implications for designing open contests in online labor markets are discussed.