Selling Multiple Items via Social Networks

TL;DR

This paper introduces a novel promotion mechanism for selling multiple items through social networks, incentivizing buyers to spread information without guaranteed payment, ensuring the seller's revenue is improved and risk-free.

Contribution

The paper presents a new incentive-compatible promotion mechanism that guarantees improved seller revenue without requiring payment if the promotion is ineffective.

Findings

Mechanism guarantees better revenue than no promotion.

Buyers are incentivized to invite neighbors without guaranteed payment.

Seller pays only if the promotion is beneficial.

Abstract

We consider a market where a seller sells multiple units of a commodity in a social network. Each node/buyer in the social network can only directly communicate with her neighbours, i.e. the seller can only sell the commodity to her neighbours if she could not find a way to inform other buyers. In this paper, we design a novel promotion mechanism that incentivizes all buyers, who are aware of the sale, to invite all their neighbours to join the sale, even though there is no guarantee that their efforts will be paid. While traditional sale promotions such as sponsored search auctions cannot guarantee a positive return for the advertiser (the seller), our mechanism guarantees that the seller's revenue is better than not using the advertising. More importantly, the seller does not need to pay if the advertising is not beneficial to her.