SHARING THE PIE - AN EMPIRICAL EXAMINATION OF REFERRAL REWARD SHARING ON PEER-TO-PEER PLATFORMS

Prior research on the rapidly growing sharing economy tends to focus on digital or underutilized goods, which do not entail any sacrifice for the giver when shared. In contrast, this study investigates money sharing in a referral reward context, which represents a zero sum game. With data from two peer-to-peer platforms with different market structures, this investigation of influential factors reveals that more recommenders create positive cross-side but negative same-side network effects. Contrary to behavioral economics, more than half the recommenders share more than 70% of the reward with referral recipients. Reputation is an important competitive advantage for recommenders; sharing referral rewards on peer-to-peer platforms benefits firms, recommenders, and recipients.