Risk-sensitive Revenue-sharing Strategy and Sensitivity Analysis in E-commerce

In this paper, we develop a new model to describe a dynamic revenue-sharing problem between an online shopping mall and a store in an E-commerce market. We formulate the revenue-sharing problem as a dynamic principal-agent problem, which is then transformed to a risk-sensitive stochastic optimal control problem where the objective of the risk-averse shopping mall is to find a risk-sensitive revenue-sharing strategy and to advise an incentive-compatible effort to the store. Sufficient conditions for the existence of a risk-sensitive revenue-sharing strategy and an incentive-compatible effort are obtained. A numerical example is solved to show the existence of such strategy and its sensitivity to the risk. Moreover, as a comparsion, we also discuss a myopic revene-sharing strategy and find that dynamic revenue-sharing strategy is more effective in expanding the expected profit of the shopping mall.