Author(s)
Daron Acemoglu, Mohamed Mostagir and Asuman Ozdaglar
Source
MIT Department of Economics Working Paper No. 14-04, 2014
Summary
Crowdsourcing entails calling on the public to work on tasks. Ideally, low-skill workers try the task first, with high-skill workers trying the task only when low-skill workers fail. Workers self-select into this hierarchy if rewards increases each time a worker fails to complete a task.
Policy Relevance
Crowdsourcing workers can be managed as if they were within a firm. Rewards encourage workers to organize themselves without centralized control.
Main Points
- Goldcorp, a gold mining company, was almost bankrupt when it offered geological survey data to the public, offering prizes to those who predicted where gold would be found; the crowd’s choice of 110 sites yielded $8 million in gold, making Goldcorp the second largest gold mining company in the world.
- Crowdsourcing is a new method, entailing outsourcing tasks to a broad set of workers using a virtual marketplace.
- In a centralized firm, managers know the skill level of workers, even if they do not know the difficulty of a pool of tasks. With crowdsourcing, both the skill level of workers and the difficulty of tasks are unknown, and control of workers is decentralized.
- The effectiveness of a system for managing workers can be assessed by considering if it wastes the time of high-skilled workers, a valuable resource.
- In theory, managers could send tasks to the high-skilled workers first, so that hard problems do not reach the less skilled, but this is inefficient, as some high-skilled workers will waste time solving easy problems.
- The best way to manage tasks of unknown difficulty is a skill hierarchy:
- A group of less-skilled workers attempt the tasks first.
- High-skilled workers engage in a task only if the low-skilled workers fail to finish it.
- The output of high-skilled workers is reduced when low-skilled workers attempt tasks first; ordinarily, high-skilled workers will prefer to remain in the lower tier and tackle easy tasks.
- High-skilled workers will self-select into a second tier that tackles only harder tasks, if each time a worker fails to complete a task, the price paid for completing that task rises.