Policy Design for Two-sided Platforms with Participation Dynamics

In two-sided platforms (e.g., video streaming or e-commerce), viewers and providers engage in interactive dynamics: viewers benefit from increases in provider populations, while providers benefit from increases in viewer population. Despite the importance of such “population effects” on long-term platform health, recommendation policies do not generally take the participation dynamics into account. This paper thus studies the dynamics and recommender policy design on two-sided platforms under the population effects for the first time. Our control- and game-theoretic findings warn against the use of the standard “myopic-greedy” policy and shed light on the importance of provider-side considerations (i.e., effectively distributing exposure among provider groups) to improve social welfare via population growth. We also present a simple algorithm to optimize long-term social welfare by taking the population effects into account, and demonstrate its effectiveness in synthetic and real-data experiments. Our experiment code is available at https://github.com/sdean-group/dynamics-two-sided-market.

In two-sided platforms (e.g., video streaming or e-commerce), viewers and providers engage in interactive dynamics: viewers benefit from increases in provider populations, while providers benefit from increases in viewer population. Such participation dynamics and their effect on the viewer and provider benefits should be important for long-term platform health.This paper studies the dynamics and recommender algorithm design on two-sided platforms under the aforementioned "population effects". Our findings warn against the use of myopic-benefit-seeking algorithms and shed light on the importance of provider-side considerations (i.e., effectively distributing exposure among provider groups) to improve social welfare via population growth.Based on the analyses, we also present a simple algorithm to optimize long-term social welfare by taking the population effects into account, and demonstrate its effectiveness in synthetic and real-data experiments.