Best or Right? - Positioning and Authentication in Online Matching Platforms

When a company is looking for a business partner, or an individual is looking for a life partner, compatibility is an important consideration, without which a match can be ineffective. Online matching platforms are a useful resource in such situations, and can mitigate compatibility concerns by providing a service that recommends the compatible type of candidate for a match-seeker. At the same time, online match-seekers also face the challenge that candidates may misrepresent their credentials. In this paper, we examine an online matching platform's decisions about whether to offer positioning and authentication services, where positioning helps match-seekers determine the subjective compatibility of matches, while authentication enables match-seekers to differentiate based on an objective quality dimension. Despite the orthogonal dimensions addressed by these services, we show that the choices online matching platforms face about offering them are non-trivial. We identify conditions under which it is in the interest of the platform to offer each of the services. We also characterize, in terms of market quality and the platform's positioning capability, conditions under which the two services act as mutual substitutes or complements with respect to their value to the platform. In addition, we provide guidelines for the platform's pricing decisions. Our results provide valuable practical insights for owners and operators of match-making platforms, by helping them understand the interplay between these two important services in online matching