Optimal Mechanism Design with Referral

• 成果类型: Article
• 署名作者: Zhou, Hao; Zhang, Jun
• 署名单位: Zhejiang University of Finance & Economics; University of Technology Sydney
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.01540
• 发表日期: 2025
• 关键词: Auctions; mechanism design; Referral

摘要

This paper establishes the optimal selling mechanism when a seller can incentivize an existing buyer to refer his privately known potential buyer to participate. We identify three optimal channels for providing referral incentives. First, if the existing buyer declares that no potential buyer exists, his virtual value is penalized. Second, if the existing buyer refers the potential buyer to the seller, his virtual value is boosted. Third, in some scenarios where this carrots-and-sticks-via-virtual-value approach is insufficient for creating proper referral incentives, the existing buyer is then given a constant referral bonus for referring the potential buyer. We also provide conditions under which the optimal mechanism can be implemented using simple mechanisms. Finally, we demonstrate that the conventional resale mechanism is suboptimal.