Prof. Xing Hu
The University of Hong Kong
Talk: Token Design for Favor Trading with Dynamic Membership
Abstract: We investigate the design and management of token-based favor-trading platforms, explicitly accounting for dynamic entry and exit of heterogeneous participants. Favor-trading systems, which facilitate non-monetary reciprocal exchanges, offer substantial potential for resource sharing and collaboration. However, existing research largely assumes a fixed set of participants, limiting its relevance to real-world environments where users frequently join or exit. To address this gap, we design a dynamic system that accommodates participant turnover and heterogeneity. We propose novel token-based mechanisms: token issuance (at zero balance), redemption (at a finite cap U), and recycling (at exit). Together, they ensure stable token circulation and incentivize an efficient “always-trade” strategy. Our analysis characterizes the conditions for this strategy to prevail in equilibrium, showing it is sustained if the favor's benefit-cost ratio exceeds a specific threshold. Further, we demonstrate that a finite token cap is necessary for equilibrium and that our recycling mechanism is essential for making the system robust and scalable by preventing the threshold from growing exponentially. We also show the mechanism is robust to participant heterogeneity. By bridging theoretical insights and practical design, our work provides the first rigorous framework for operating favor-trading systems with dynamic membership. The results have direct implications for time-banking, decentralized capacity-sharing platforms, and broader applications in tokenized service exchanges.
Biography: Xing Hu is an associate professor in innovation and information management at HKU Business School. Her research spans AI-driven operations and digital platform design and operations, combining foundational work on online retailing operations, dynamic pricing, revenue management, and sharing-economy platforms. Her research has been published in leading journals including Management Science, Operations Research, and Manufacturing & Service Operations Management. She received her Ph.D. from the Stern School of Business at the New York University, and obtained her Bachelor of Science in Mathematics from the Peking University. Before joining the University of Hong Kong, she taught at the University of Oregon.
