Optional Verification and Signaling in Online Matching Markets: Evidence from a Randomized Field Experiment

• Published in: Information systems research 2023-12, Vol.34 (4), p.1603-1621
• Main Authors: Shi, Lanfei, Viswanathan, Siva
• Format: Article
• Language: English
• Subjects: Asymmetry; Credibility; Dating services; deep learning; Females; Males; Matching; optional verification; Platforms; randomized field experiment; signaling; Software; two-sided matching markets; Verification
• ISSN: 1047-7047; 1526-5536
• DOI: 10.1287/isre.2022.1194

Online matching platforms could lack common informational mechanisms, such as ratings and reviews, that serve to reduce information asymmetry in transactional platforms. The lack of verified information about participants further exacerbates issues of information asymmetry in such markets. Our study focuses on a novel role of verification in such matching markets—its ability to serve as a credible signal for a user, when such verification is made optional and visible to other users. In collaboration with a leading online dating platform with no reputation mechanisms and where most of the information is self-disclosed, we design and conduct a randomized field experiment to examine not only who chooses to verify but also, the effectiveness of such optional verification for different types of users. We identify that a simple-to-implement mechanism, such as phone verification, when made optional can take on additional significance in platforms that lack alternate reputation and transaction-assurance mechanisms, especially for those in early years or those that lack other credible mechanisms to verify important information about participants. Our findings also provide insights into how optional verification has heterogeneous impacts on different platform users and can also facilitate desirable matching and benefit the platform as a whole, paving the way for examining other similar verification mechanisms. Online matching platforms lack common informational mechanisms such as ratings and reviews that serve to reduce information asymmetry in transactional platforms. The lack of verified information about participants further exacerbates issues of information asymmetry in such markets. This study focuses on a novel role of verification in such matching markets—its ability to serve as a credible signal for a user when such verification is made optional and visible to other users. In collaboration with a leading online dating platform with no reputation mechanisms and where most of the information is self-disclosed, we design and conduct a randomized field experiment to examine not only who chooses to verify but also, the effectiveness of such optional verification for different types of users. Interestingly, we find that users on the two sides use the same signal very differently. Males act consistent with the conventional prediction of signaling, with high-type males being more likely to opt in to verification. As for females, we find that medium-type females are