Designing promotion incentive to embrace social sharing: Evidence from field and lab experiments

This study examines whether and how firms can design novel incentives to engage customers in this social sharing era. In collaboration with a leading online deal platform, we conduct a large-scale randomized field experiment and two lab experiments to test the effectiveness of different incentive designs (varied by shareability and scarcity of promotion codes) in driving social sharing senders' purchase and referrals. We find that providing senders with one non-shareable promo code significantly increases their purchase likelihood but does not influence their referrals. In contrast, the senders who receive one shareable code are less likely to purchase themselves yet are more likely to make successful referrals. Meanwhile, the incentive design with two codes that has one non-shareable code and one shareable code increases neither the senders' purchase nor their successful referrals. We further conduct two lab experiments on Amazon Mechanical Turk to explore the underlying mechanisms of the observed relationships.