Game Analysis on the Credit Model of Online Group Buying

Transcription

1 ssociation for Information ystems I Eectronic Library IeL Eevent Wuan Internationa Conference on e- Business Wuan Internationa Conference on e-business Game naysis on te Credit Mode of Onine Grou Buying Yongbo JING Business coo, Qingdao ecnoogica University, Cina Foow tis and additiona works at: tt://aise.aisnet.org/wiceb20 Recommended Citation JING, Yongbo, "Game naysis on te Credit Mode of Onine Grou Buying" 202. Eevent Wuan Internationa Conference on e- Business. 26. tt://aise.aisnet.org/wiceb20/26 is materia is brougt to you by te Wuan Internationa Conference on e-business at I Eectronic Library IeL. It as been acceted for incusion in Eevent Wuan Internationa Conference on e-business by an autorized administrator of I Eectronic Library IeL. For more information, ease contact eibrary@aisnet.org.

2 e Eevent Wuan Internationa Conference on E-Business nowedge Management and Business Inteigence rack 339 Game naysis on te Credit Mode of Onine Grou Buying Yongbo JING Business coo, Qingdao ecnoogica University, Cina bstract: In recent years, many ositive factors suc as te cutivation of te market environment, te oicy suort, etc ave rovided good deveoment sace for e-commerce. s a new mode of e-commerce, onine grou buying originated from merican Grouon. But many robems ave aready exosed wit its raid deveoment, suc as te good and bad grou buying websites being interminged, te seer s fraud oeration, no guarantee after saes, and te consumer s difficuty to maintain is rigt, etc. In tis aer we first generaize te interests tat onine grou buying brings to a te industry cain subjects. en according to tose exosed credit robems, we first anayze an individua seer s beavior on te market using static game anaysis and find out factors infuencing te game subjects strategy coosing; ten discuss te woe market s gaming beavior using te dynamic game wit imerfect information and find out its erfect Bayesian euiibrium by te backwards induction metod. t ast we ut forward some measures to soving existing robems. eywords: onine grou buying, subject s Interest, credit mode; game anaysis. IRODUCION ccording to te draft of te tweft five-year anning, e-commerce wi be isted as one of te imortant arts of strategic new industries during te tweft five-year anning. nd as a new generation of information tecnoogy branc e-commerce soud be taken as te core of te next informatization. o researcing on issues about e-commerce as imortant ractica significance. s a new mode of e-commerce, onine grou buying abbreviated as grou buying sometimes originated from merican Grouon. In Cina, te time since it as aeared is not ong. But grou buying as grown raidy resent years because its business mode is easiy coied and te admittance tresod is ow. t te same time, te raid deveoment of te internet tecnoogy, te arge base number of netizens and te strengtened credit in e-commerce market a as good acceerant effects on its growt. ccording to te Reort of Cinese Onine Grou buying Market Researc in 20iResearc, 20, te grou buying market s saes in domestic in 200 as reaced 4.5 undred miions, and it wi reac 43.5 and 300 undred miions in 20 and 205 resectivey. But many robems ave aready exosed wit its raid deveoment, suc as te good and bad grou buying websites being interminged, te seer s fraud oeration, no guarantee after saes, and te consumer s difficuty to maintain is rigt, etc. Many researcers ave studied te toic in te view of game teory, suc as static game anaysis [], dynamic game anaysis [2] and cooerative game anaysis [3]. Our works in tis aer are as foows: Introduce te eementary knowedge about onine grou buying; 2 Buid te mode of dynamic game wit imerfect information about an individua seer on te onine grou buying market. nd, we sove te mixed strategy Nas euiibrium troug te static game mode; 3 We aso buid te mode of dynamic game wit imerfect information about te woe onine grou buying market. en we find out te erfect Bayesian euiibrium using te backwards induction metod; 4 Discuss te corresonding enomenon on te current market according to te above anaysis and ut forward some usefu resoution strategies.

3 340 e Eevent Wuan Internationa Conference on E-Business nowedge Management and Business Inteigence rack 2. ONLINE GROU BUYING 2. Onine grou buying Onine grou buying is te main form of grou buying. It means individua consumers wit te same urcase intention are gatered togeter as a woe by te internet, and ten tey can make mass urcase from te seer wit te ower rice Baidu Baike. Generay tere are imitations about te time interva and te number of orders in grou-buying. nd te amount of ayment is usuay sma. roducts of grou buying can be cassified as service cass and rea cass generay. s a kind of romotion activities, one of te goas of grou buying is to acieve te effect of advertisement to attract consumers. For te service cass, te margina cost of roduction is ow or te gross rofit is ig, tere is arge sace for te rice to be discounted. o it is te main art of grou-buying. nd, te roduct s discount ratio, te discounted rice and te region a wi infuence te effect of grou-buying. Grou buying as two main forms: One form is grou buying tat te buyers are organized sontaneousy by means of te internet. Here one of te buyers originates and organizes te dea. In tis case te grou s scae is generay sma and te bargaining ower is ow. nd, te originator undertakes te task of organization and coordination, but e/se wi receive te same interest wit te oter members in te grou. His interest cannot cover is cost usuay. o tis form isn t seen often. e oter form is te one organized by rofessiona grou buying organizations ere we mainy refer to grou buying websites. In tis form, grou buying is originated by te rofessiona website. e site wi reac an arrangement wit te seer in advance in wic te seer agrees to us some roduct on te website wit ower rice and a certain eve of service. en te site is resonsibe for te advertisement and organizes te buyers to urcase. e site s roe is a rofessiona agent. It wi extract a certain roortion of te seer s saes income as te commission. In tis mode, te grouing cost is reative ow and te grou s scae is often arge so tat te margining ower is ig. It is te mainy form of te current grou buying. 2.2 advantages of onine grou buying Grou buying as a te attributes of a dea, so a te industry cain subjects ave teirs ayoffs inevitaby. Firsty, grou buying can bring a ot of orders to te seer wo can ten reaize sma rofits but uick turnover and recovering is cas fow uicky. t te same time, grou buying es te seer advertize teir roducts wit ower cost. econdy, te site rovides a atform to buyers to communicate easiy and torougy. en te buyers ose caused by information asymmetry in te dea rocess is eiminated as far as ossibe. nd, tey can enjoy more of te soing benefits wit te enanced efficiency. irdy, te website takes commission from te dea, it need no roduction, ogistics, etc. it need are rofessionas to maintain te site, searc for exceent roducts. 2.3 disadvantages of onine grou buying Many robems ave resented during te rocess of grou buying. ccording to te Reort of Cinese Onine Grou buying Researc in 20DCCI, 20, 5.5% of te users tink te consumers rofits can t be romised; 43.% tinks tere are robems wit te roducts uaities and 34.7% tinks te seers credit degree is not ig. Oters suc as tat te website asn t exained te activity ceary are aso resonded freuenty. 3. GME MODEL OF ONLINE GROU BUYING 3. mode assumtion Game aying is a common society enomenon. Game teory researces suc decisiona and baanced robem tat wen a subject s coice is infuenced by te oter s, ow is coice infuences te oter s in turn [4, 5].

4 e Eevent Wuan Internationa Conference on E-Business nowedge Management and Business Inteigence rack 34 Here te decisiona subject can be a erson, an industry or an organization. standard game consists of four key eements [4] : te articiants or te subjects, strategies, te gaming order and teir ayoffs. s a comex game enomenon, onine grou buying mainy invoves te seer, te grou buying website and te consumers iresearc Inc.. But te website and te seer ave te same interests and are te community []. o in tis aer we mainy discuss te game between te seer and te consumers. We make te foowing assumtions on te remise of not infuencing te findings. ssumtion : tere are ony two articiants in a dea or a gaming enomenon: te consumers and te seer. nd tey are economic men wit imited rationaity: teir uroses are to ursue te maximum sef rofits. ssumtion 2: te reevant information about market is comete. at is, te articiants ave accurate knowedge about te oter s caracters, te strategy sace and teir ayoffs. ssumtion 3: tere is an order of te two articiants action: first, te seer sonsors te grou buying activity, and ten te consumers decide weter to buy or not. But te consumers don t know te seer s coice cometey before tey make decisions, tat is, tey don t know ow is te seer s roduct and tey ave imerfect information. o te game between tem is a dynamic game wit imerfect information. 3.2 game mode of onine grou buying uose a consumers wis to buy roducts wic rices are consistent wit teir vaues. nd te seer wants to se is roduct anyow and as te strong desire to se seconds at best uaity rices. For a grou buying activity organized by te website, te seer articiant can join in it strategy J: join or not join strategy NJ: not join; if e cooses strategy J, ten e can describe is roduct and te corresonding service trutfuy and give te reasonabe rice strategy G: good or credibe. Or tey can roer decorate it, exaggerate its uaity to mark iger rice strategy B: bad or fraud. For te consumers, tey can buy tat roduct strategy : buy or not buy strategy : not buy in site of wat te seer s strategy is aead. If te seer is fraud, te robabiity to be discovered is λ and te tota cost e must ay is for exame, reducing is credits, receiving fines, etc.. Wen te roduct s uaity is inferior and te seer wants to mark a iger rice, e must cost to decorate it. Because te foowing transaction aens ony wen te seer cooses strategy J tat is, te robabiity of J aearing is 00%, so te remise of te game anaysis is tat te consumers ave aready observed te seer s strategy J.. ituation one: Consider an individua seer on te grou buying market. e roduct s rice is or wen te seer s strategy is G or B resectivey. For every cometed transaction, suose te seer s rocessing fee is F, te roduct s roduction cost is C, te website s commission is Y and te consumers evauation for te roduct utiity is obviousy, 0 < < <. en tis dynamic game wit imerfect information can be resented as te foowing extensive form see figure. During te rocess of grou buying, consumers can t get fu information about roducts under consideration even toug tey form a union because of te seer s keeing secret about is roducts, information not transferred sufficienty and being asymmetric, etc. at is, tey can t know about torougy te oter subject s action information before teir coosing. We can take tis kind of te singe-ass dynamic gaming as a static gaming see tabe. In te ayoff array, te first vaue reresents te seer s ayoff and te second one is te consumer s. 2. ituation two: Consider te woe grou buying market. ere are various seers and roducts on te market. uose a roducts uaity can be cassified as good and bad and te consumers evauation of teir utiities are and resectivey. Wen joining in te grou buying activity, te seer can describe is roduct onesty and mark te rice as, or be fraud and

5 342 e Eevent Wuan Internationa Conference on E-Business nowedge Management and Business Inteigence rack mark te rice as. Oter yotesis is te same as tat in situation one. en te extensive mode of tis dynamic game is as foows figure 2. Were: G B 2 2 0,0 C F Y, - -C +F+Y, - --λ, 0 Figure te dynamic game mode invoving an individua seer on te onine grou buying market abe te static game mode invoving an individua seer on te onine grou buying consumer Buy Not buy seer GoodG -C +F+Y, - 0,0 Bad B C F Y, - - -,0 GB BB H L H L C F Y, 0, 0,0 C F Y, 0, 0 0, 0 C F Y, C F Y, Figure 2 te dynamic game mode of te woe grou buying market

6 e Eevent Wuan Internationa Conference on E-Business nowedge Management and Business Inteigence rack 343 GB: te roduct s uaity is suerior. BB: te roduct s uaity is inferior. H: te se is fraud and marks a roduct wit a ig rice. LL: te seer is credibe and marks a roduct wit a ow or an aroriate rice. 4. GME NLYI OF HE GROU BUYING MRE 4. ituation One: Consider an Individua eer on te Grou Buying Market ccording o te ayment matrix in tabe 3., wen te seer cooses strategy G, te consumer wi coose in order to maximize is rofit; and wen te consumer cooses, te seer s coice deends on is excetive ayoff under different strategies. If > - -, te seer wi cooses G and te mode as te ony Nas euiibrium G,. 2 If < - -, te seer wi cooses B and te consumer wi cooses in turn, te seer ten must cooses G. o te mode as no Nas euiibrium of ure strategies. Now we can find its Nas euiibrium of mixed strategies. uose te robabiity tat te consumer cooses is and te seer cooses G is. Consider te two gaming subjects ayoffs in a singe ass game. e seer s exected ayoff is: en in order to get is maximum exected ayoff, tere must be: 0 E 2 and *. e consumer s exected ayoff is: ] [ 0 0, E 3 Let 0 V V V E b b g 4 nd * en in tis mode te Nas euiibrium of mixed strategies of seer, consumer is ] [ 0, Y F C Y F C Y F C Y F C E

7 344 e Eevent Wuan Internationa Conference on E-Business nowedge Management and Business Inteigence rack,. 4.2 ituation wo: Consider te Woe Grou Buying Market From te above anaysis we can see tat factors Y, F and C ave no effect on te game subjects strategies. en tere is no infuence if we ignore tem in our foowing work. o te seer s ayoffs under different situations can be cassified see tabe 2. abe 2 te simified seer s ayoffs te consumer s decision at GB,H, GB,L, BB,H, BB,L, te seer s ayoff --λ It is cear tat >, > ; and a suerior roduct wit te ig rice is better tat an inferior one wit te ow rice, but te ayoff in te atter situation isn t to suc an extent tat ess tan zero. But an inferior roduct wit te ig rice wi bring negative ayoff. For te consumer, it is best to buy a good roduct wit te ow rice. is is an event wit itte robabiity yet. at is: > > >0> In te mode resented in figure 2, te seer can coose a ow or ig rice in site of te roduct s uaity. o consumers can t make reasonabe decision according to te rice ony. Now we adot te backwards induction metod to find out its erfect Bayesian euiibrium. Let M= +λ be te tota cost wen te seer asks a ig rice for is inferior roduct. ere are two circumstances M> at is, te seer need ig cost to se an inferior roduct wit a ig rice. Now te seer s ayoffs under ats BB, H, and GB, H, are and resectivey. Because 0 te mirror of te uaity. Consumers wi confer tat:, o te ig rice occurs ony wen te roduct is suerior. Now te rice is GB H GB H : te robabiity tat a roduct wit te ig rice is suerior BB H 0 BB H : te robabiity tat a roduct wit te ig rice is inf erior GB L 0 GB L : te robabiity tat a roduct wit te ow rice is suerior BB L BB L : te robabiity tat a roduct wit te ow rice is inf erior ccording to te above deduction, wen te roduct is marked wit a ig rice te consumer s exected ayoff of strategy is:

8 e Eevent Wuan Internationa Conference on E-Business nowedge Management and Business Inteigence rack 345 GB H BB H 0 nd is ayoff of is 0. o is is dominant strategy now. Based on te consumer s above deductions, Wen te roduct is suerior te seer s ayoffs under H and L are and resectivey, and e soud coose te strategy H because > ; oterwise, if te roduct is inferior, e soud coose te strategy L and mark a ow rice because of >0>. o te erfect Bayesian euiibrium of tis mode is: e seer soud marks ig rice wen te roduct is suerior, oterwise marks a ow rice. 2 Consumers wi buy out a roducts sod on te grou buying market. at is to say: Consumers are fu of confidence to te grou buying market. ey tink a te seers are credibe and woud ike to buy out a teir roducts M< Consider an extreme case: M=0. No cost is needed to oerate frauduenty. Now no one but a foo wi mark a ow rice for te inferior roduct. e rice can t refect te roduct s uaity. Consumers wi make deductions tat: GB H 0 GB H : te robabiity tat a roduct wit te ig rice is suerior BB H BB H : e robabiity tat a roduct wit te ig rice is inf erior o wen te roduct is marked wit a ig rice: e consumer s exected ayoff of te strategy is GB H BB H 0. nd is exected ayoff of strategy is 0 in any case. o is te dominant strategy. Wen te roduct is marked wit a ow rice: e consumer s exected ayoff of te strategy is: GB L BB L 0 Now is te dominant strategy. e market resents te invaid state. consumers wi buy roducts wit ow rices in site of teir uaity. e ones wit ig rices are abandoned. nd te enomenon named adverse seection aears on te market. 5. CONCLUION 5. anaysis on te gaming resuts yntesize te above anaysis we can see tat te ricing sace, te consumer s utiity oss, te deceive cost and te discovering robabiity wen ceating are a aying imortant roes on te gaming subjects strategy seection. 5.. ituation one: consider an individua seer on te grou buying market. e seer s strategy is directed reated to is unjust rofit. e smaer te rice difference tat can be set, te ower te seer s unjust rofit, and te arger te robabiity tat te seer is credibe. 2 Wen a fraud oeration is found easiytat is: λ is arger, and te fine and oter cost are substantia, te

9 346 e Eevent Wuan Internationa Conference on E-Business nowedge Management and Business Inteigence rack robabiity tat consumers coose wi increase, wic in turn imes te seer to coose G. 3 e consumers utiity oss is aso concerned. e arger te oss, te arger is te robabiity tat te seer is credibe, ten te ess te consumers coose to buy. nd te cost deends on te seer s beavior 5..2 ituation two: consider te woe grou buying market. Weter te market is effective or not deends on te cost to be fraud invoving,, λ. Wen fraud oeration need ig camoufage cost and even toug it is easy to be find out, and ten te seer must be faced wit undertaking ig fines, credit reegation, exosure, etc, most seers won t ave te motive to oerate frauduenty. On te market te rice is consistent wit te uaity and consumers are otimistic to buy. e market is wit fu success ; oterwise adverse seection wi make te market become invaid. 5.2 oving trategies ink about key factors tat infuence te market oeration in te two cases: camoufage cost invoving λ,,, ricing sace, utiity oss. We must intensify efforts to unisment, comress te ricing sace and decrease consumers utiity oss so tat we can cutivate te grou buying market we. o, we romt te foowing resoution strategies accordingy erfect te reative aws and reguations, intensify efforts to aw enforcement and unisment. It is te key to cutivate te integrity of te grou buying market. In te fina anaysis, many robems exosed on te grou buying market are reated to integrity. s one deveoing mode of e-commerce, tere is sti muc vunerabiity in its suervision wic makes te cost of fraud oeration ow during grou buying. Firsty, erfect te egisation and te suervision mecanism. en te robabiity of fraud oeration being found wi increase and te seer s fuky sycoogy wi be owered. e tird suervision institution and te credit autentication mecanism wi secify te market s beavior; secondy, we must reinforce te unisment efforts of fraud beavior to increase fraud cost. One is to adot financia enaties; two is to exose suc beavior by some means to increase te credit cost. t te same time, increase te reward efforts to credit beavior, suc as enance te credit degree, give referentia treatment to enterrises wit good fait, etc Buid a igy efficient information transferring system to sove information asymmetry during grou buying and reduce te ricing sace. Information asymmetry can cause adverse seection and mora azard. Higy efficient information transferring system makes a te gaming subjects data oen timey to essen te cost of getting information, eseciay to consumers. en te more oen te information, te etter te oortunity of fraud activity occurring and te arger te robabiity to cooeration, ten te easier to buid an effective credit mecanism. REFERENCE [] Jia iaoyan, a tudy on Onine Grou buying Based on game teory, Contemorary Economics, 207 [2] Li Cenuan, Game naysis on te Grou buying Mode, Journa of Guangdong Coege of Finance and Economics, Vo. 5 No. 2 r [3] Zang xin and Zouong, naysis for Grou buying Based on Coorerative Game,Jiangxi cience, Vo. 25 No. 3 Jun.2007 [4] Li Bangyi and Wang Yuyan, Game eory and te ication, Cina Macine ress, 200 [5] Fan Ruguo and Han Mincun, Game eory, Wu Han University ress, 2007 [6] Yao Feng, eam Buying naysis Using Game eory, Journa of angai Jiaotong University, Vo. 4 u. r. 2007