The Role of Problem Specification in Crowdsourcing Contests for Design Problems: A Theoretical and Empirical Analysis

Abstract

This paper studies the role of seekers' problem specification in crowdsourcing contests for design problems. Platforms hosting design contests offer detailed guidance for seekers to specify their design problems when launching a contest. Yet, problem specification in such crowdsourcing contests is something the theoretical and empirical literature has largely overlooked. We aim to fill this gap by offering an empirically-validated model to generate insights for the provision of information at contest launch. We develop a game-theoretic model featuring different types of information (categorized as “conceptual objectives” or “execution guidelines”) conveyed in problem specifications, and assess their impact on design processes. Real-world data is used to empirically test hypotheses generated from the model, and a quasi-natural experiment provides further empirical evidence for our predictions and recommendations. We show theoretically and verify empirically that, with more conceptual objectives disclosed in the problem specification, the number of participants in a contest decreases, but the trial effort provision by each participant does not change; with more execution guidelines disclosed in the problem specification, the trial effort provision by each participant increases, but the number of participants in a contest does not change. With that knowledge, we are able to formulate seekers' optimal decisions on problem specifications, and find that, to maximize the expected quality of the best solution to crowdsourced design problems, seekers should always provide more execution guidelines, and only a moderate number of conceptual objectives.