Liang, ChenHong, YiliGu, Bin2016-12-292016-12-292017-01-04978-0-9981331-0-2http://hdl.handle.net/10125/41156This paper investigates how IT-enabled monitoring systems mitigate moral hazard in an online labor market and their effect on market competition. We exploit a quasi-experiment at Freelancer when it introduced an IT-enabled monitoring system in 2015. We use a difference-in-differences (DID) approach to identify the treatment effect of the monitoring system on employer contractor choice, market competition, and employer surplus. We found that the IT-enabled monitoring system lowers the employers’ willingness to pay the reputation premiums. Meanwhile, comparing the trend of the control group, the IT-enabled monitoring system raised the employer surplus in hourly projects and increased the number of bids. Our result suggests that IT-enabled monitoring systems have a significant effect on alleviating moral hazards, reducing agency costs, and facilitating market competition.10 pagesengAttribution-NonCommercial-NoDerivatives 4.0 Internationalmoral hazardmonitoring systemsonline labor marketreputation systemscontract typeConference Paper10.24251/HICSS.2017.006