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Autonomous Agents and Multi-Agent Systems (2021) 35:23
https://doi.org/10.1007/s10458-021-09509-7
1 3
Information Design inAffiliate Marketing
SharadhiAlapeSuryanarayana1 · DavidSarne1· SaritKraus1
Accepted: 21 May 2021 / Published online: 31 May 2021
© Springer Science+Business Media, LLC, part of Springer Nature 2021
Abstract
The recent massive proliferation of affiliate marketing suggests a new e-commerce para-
digm which involves sellers, affiliates and the platforms that connect them. In particular,
the fact that prospective buyers may become acquainted with the promotion through more
than one affiliate to whom they are connected calls for new mechanisms for compensating
affiliates for their promotional efforts. In this paper, we study the problem of a platform
that needs to decide on the commission to be awarded to affiliates for promoting a given
product or service. Our equilibrium-based analysis, which applies to the case where affili-
ates are apriori homogeneous and self-interested, enables showing that a minor change in
the way the platform discloses information to the affiliates results in a tremendous (posi-
tive) effect on the platform’s expected profit. In particular, we show that with the revised
mechanism the platform can overcome the multi-equilibria problem that arises in the tradi-
tional mechanism and obtain a profit which is at least as high as the maximum profit in any
of the equilibria that hold in the latter.
Keywords Affiliate marketing· Equilibrium· Dynamic pricing· Mechanism design· Gig
economy
1 Introduction
Affiliate marketing is a new e-commerce paradigm in which by promoting other people’s
(or companies’) products or services one can earn a commission (either resulting from a
click or from an actual sale) [33, 42]. The idea is that content producers can monetize their
network of followers by promoting products and services, hence saving manufacturers time
and effort in reaching their target audience. The manufacturers in turn compensate the con-
tent producers by sharing some of the revenue and this has led to many companies nowa-
days offering content producers a financial incentive to promote their product through an
* Sharadhi Alape Suryanarayana
sharadhi.as@gmail.com
David Sarne
david.sarne@biu.ac.il
Sarit Kraus
sarit@cs.biu.ac.il
1 Department ofComputer Science, Bar-Ilan University, RamatGan, Israel
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