Simpler sybil-proof mechanisms for multi-level marketing

  • Authors:
  • Fabio A. Drucker;Lisa K. Fleischer

  • Affiliations:
  • Dartmouth College, Hanover, NH, USA;Dartmouth College, Hanover, NH, USA

  • Venue:
  • Proceedings of the 13th ACM Conference on Electronic Commerce
  • Year:
  • 2012

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Abstract

Multi-level marketing refers to a marketing approach in which buyers are encouraged to take an active role in promoting the product. This is done by offering them a reward for each successful referral of the product to other prospective buyers. To encourage potential customers to buy early and to give referrals to influential people, these mechanisms also reward indirect referrals --- a direct referral linked to the buyer through other direct referrals. Doing so can make the referral/reward system vulnerable to sybil attacks --- where profit maximizers create several replicas in order to maximize their rewards. In this paper we propose a family of mechanisms for which sybil attacks are not profitable. We do this by modifying any mechanism that satisfies certain natural properties of sensible reward mechanisms to obtain one that is invulnerable to sybil attacks by profit maximizers while preserving its natural properties. Our modified mechanisms are also collusion proof. Finally, we give a concrete example of a natural mechanism that is sybil proof and simple to implement.