I posted the same question on VS developer community forum here and got the following answer:

Thanks for your time and wish you a good day!

During my discussion with our internal resources, we confirm that for the current time it’s suggested that we should use displayName and ID in this API. And as UniqueName is deprecated, we should not use it in our workflow.

We have reported this situation to our related team for further evaluations. And for this current time, we will close this ticket as this is not a bug.

Thanks for your understandings, and we’d recommend you to come back to this community if you meet any issues related to Azure DevOps.

We will still be here to help you solve issues. Thank you for helping us build a better Azure DevOps.

So, currently you can assign tester using displayName and id only.