Will self-gifting of streamers hurt unions? Analyzing the union's compensation mechanism for a live streaming supply chain

As an emerging online media for entertainment and social contact, live streaming already has a considerable market after its boom in recent years. On a live streaming platform, as content providers and the agents of providers, streamers and unions are the two most important roles on the supply side. Once streamers join a union, they will be paid according to the union's compensation mechanism instead of directly paid by the platform. In practice, the union's compensation mechanism usually contains a basic requirement for streamers’ proceeds, which may induce a specific self-gifting behavior among streamers — when a streamer's proceeds have not met the requirement, the streamer may donate to himself/herself to increase his/her income. An interesting question is how should the union respond to such speculation, stand by or prohibit it? This paper considers a Stackelberg game between a union and a mass of streamers. The union utilizes a typical compensation mechanism with a basic proceeds requirement, and streamers are heterogeneous in their abilities. Using a backward induction approach, we derive the streamers’ optimal decisions for a given compensation mechanism and then numerically optimize the union's compensation parameters. Our analysis reveals that when the union's compensation parameters meet certain conditions, some streamers will donate to themselves, and more low-ability streamers will join the union. We also interestingly find that self-gifting behavior never hurts the union under its optimal compensation mechanism. The union can avoid the self-gifting behavior of streamers or even make this behavior beneficial to itself by properly setting the parameters of the compensation mechanism in different cases.