Impact of social relationship on firms’ sharing reward program

In order to make strategic decision on firms’ sharing reward program(SRP), a nested Stackelberg game is developed. The sharing behavior among users and the rewarding strategy of firms are modeled. The optimal sharing bonus is worked out and the impact of social relationships among customers is discussed. The results show that the higher the bonus, the more efforts the inductor is willing to make to persuade the inductee into buying. In addition, the firms should take the social relationship into consideration when setting the optimal sharing bonus. If the social relationship is weak, there is no need to adopt the SRP. Otherwise, there are two ways to reward the inductors. Also, the stronger the social relationship, the fewer the sharing bonuses that should be offered to the inductors, and the higher the expected profits. As a result, it is reasonable for the firms to implement SRPs on the social media where users are familiar with each other.