Abstract:

The rapid development of digital economy promotes the wide application of live streaming in network marketing in recent years. More and more brands entrust e-commerce influencers to provide product recommendation services for their online marketing. However， contracts between brands and e-commerce influencers are often different under complicatedmarket conditions. Firstly， there may be adverse selection problem， because of prior information asymmetry （e.g. consumers’ recommendation preference）. Secondly， information asymmetry after the event will lead to moral hazard problems （e.g. influencers’ effort level）. A principal-agent model consisting of a brand and an online influencer with risk aversion is built， where the brand and influencer are the principal and agent respectively. By solving the optimal incentive contract of brand and the optimal effort level of influencer under different information status， consumers’ recommendation preference and information value of influencer’s recommendation effort level are analyzed. Then the impact of consumer’s recommendation preference， influencer’s risk aversion degree and uncertain market demand on the optimal contract is explored. The results show that when the recommendation effort level is observable， the brand designs the optimal incentive contract with live streaming commission to get the whole value of the influencer. When the recommendation effort level is unobservable， the optimal incentive contract includes live streaming commission and revenue sharing fee. An increase in the risk aversion degree reduces the recommendation effort level， leading to lower profit of the brand， and thus reduces the revenue sharing fee in the optimal contract. In addition， the asymmetric information of consumers’ recommendation preference does not affect the brand’s profit when the effort level is observable， but increases the brand’s profit when the effort level is unobservable. Therefore， the brand who owns the information advantage of recommendation effort level tends to be more profitable. In all， our study provides a theoretical basis for brand’s contract design and e-commerce influencer’s recommendation effort strategy.

Key words: principal-agent model, live streaming marketing, recommendation services, incentive contract, information asymmetry