PurposeThis study highlights the effect of an inductee's altruism on referral reward programs (RRPs) on an online shopping guide platform to determine the optimal RRP and referral reward allocation under a Cashback and Referral RRP.Design/methodology/approachThe authors consider a Stackelberg game with a platform, seller, inductor and inductee, where the inductee's altruism plays a vital role in determining the optimal RRP in equilibrium.FindingsThe authors show that the conditions under which it is optimal to reward the inductor only or reward both inductor and inductee are equal or unequal depending on the degree of the inductee's altruism. Suppose the platform is unable to dynamically decide the commission fee. In that case, the platform may not always be involved in RRPs and will gradually reduce the rewards for inductees as the altruism increases.Research limitations/implicationsThis study focuses on a free-to-consumers model where sellers pay membership fees. Thus, this study has limitations regarding other pricing schemes such as a model in which consumers pay a fee while sellers do not or a model in which both types of users pay fees.Practical implicationsThis analytical work can help platforms optimize referral reward strategies and referral reward allocation considering the influence of an inductee's altruism.Originality/valueIn a Cashback and Referral RRP on a shopping guide platform, the authors provide applicable conditions for the platform to involve in the RRPs when rewarding an equal bonus for the inductor and inductee first. Further, the authors show the optimal referral reward strategy and referral reward allocation when giving the different bonuses to the inductor and inductee.

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As in traditional firms, owners of platforms may hire managers to reduce the marginal production cost. The managers' contracts may be either observable or unobservable by rival platforms. This paper analyses the impact of contract observability in a two-sided market composed of symmetric indirect externalities with quantity competition and perfect information on agents' effort. We show that, in both types of contracts, managers' effort and platform subscription on each side of the market increase as the indirect network externality becomes more intense. However, the impact of the indirect network externality on platform profit is ambiguous. Managerial incentives, consumer surplus and social welfare are higher with observable contracts; however, platform profit is higher with unobservable contracts. Our analysis demonstrates that the disclosure of incentive information in two-sided markets implies tougher competition which unambiguously increases social welfare.JEL Classification: D40, L10.