Crowdsourcing Information in Informal Supply Chains

Over 60% of global employment is informal, meaning that the majority of today's economy operates without formal contracts. In such informal working environments, people make decisions based on information that is exchanged through informal networks. This limits the information available to each member of the network and, therefore, their ability to make optimal decisions. In informal supply chains, members of the network also compete with each other, which disincentivizes the sharing of potentially valuable information. In this paper, we study the design of incentive-compatible information-sharing mechanisms for such informal supply chains. We incentivize information-sharing by disclosing partial information to mitigate the competition effect while preserving the information effect. We characterize optimal information disclosure policies and show that information sharing emerges as a subgame-perfect Nash equilibrium that is welfare-improving for all participants. Our model is informed by an information-sharing platform we deployed in informal palm oil supply chains in rural Indonesia.

Joint work with Irene Lo.