Abstract/Summary

We examine through a transaction cost theory (TCT) lens how complementors in digital networks can adopt safeguard mechanisms vis-à-vis the Platform they are associated with. We review various expressions of bounded reliability (BRel) emanating from Platforms, as documented in influential scholarly work, and we describe an arsenal of safeguard mechanisms complementors can adopt and that we have synthesized under the heading of MIDAS-model. We also assess how the cultural, administrative, and geographic distances between Platform and complementors can bias the latter’s perceptions of the Platform’s behavioral proclivities: complementors systematically tend to misjudge and overestimate the Platform’s reliability towards its partners. Such bounded rationality (BRat) related bias creates de facto hurdles for complementors to effectively safeguard against the Platform’s BRel.