Contests with Spillovers: Incentivizing Content Creation with GenAI

TL;DR

This paper models how GenAI-induced spillovers affect content creation incentives, proposing mechanisms that ensure stable efforts and maximize social welfare despite the challenges posed by free-riding and effort under-provision.

Contribution

It introduces the CCS model capturing spillover effects, proposes Provisional Allocation mechanisms ensuring equilibrium existence, and develops approximation algorithms for welfare maximization.

Findings

Proves simple mechanisms like winner-takes-all lack equilibrium.

Designs mechanisms guaranteeing unique Pareto-dominant equilibrium.

Provides algorithms with strong welfare guarantees under spillover structures.

Abstract

The rise of GenAI amplifies the economic phenomenon of positive spillovers. When creators contribute content that can be reused and adapted by Large Language Models (LLMs), each creator's effort can enhance the content quality of others by enabling easy imitation and recombination of existing content. On the one hand, such spillovers create value for the entire ecosystem; on the other hand, they risk undermining creators' incentives to invest genuine effort, as others may freely benefit from their contributions. To address this problem, we introduce the Content Creation with Spillovers (CCS) model. In our model, each creator chooses an effort level that, together with the efforts of others, determines her content quality. The platform aims to maximize the social welfare of consumers under stable behavior of the creators (pure Nash equilibrium), but can only observe the resulting qualities and not the underlying efforts. Interestingly, simple mechanisms like winner-takes-all and Tullock lead to the non-existence of equilibrium. In response, we propose the parametrized family of Provisional Allocation mechanisms, guaranteeing equilibrium existence and a unique Pareto-dominant equilibrium. While maximizing the social welfare under this family is NP-hard, we develop approximation algorithms that apply to a broad class of spillover structures and provide strong welfare guarantees. Specifically, in the worst-case analysis, we devise efficient algorithms for bounded spillovers and tree-structure spillovers. We also introduce Greedy Cost Selection, a linearithmic time algorithm that achieves approximately optimal results in the average case analysis. Together, our results provide game-theoretic foundations for sustaining human content creation in the era of GenAI.