Study on the moderating effect of social distance on the bonus distribution scheme in online social referrals

Social referrals refer to disseminating business information utilizing the social relationship, as well as encouraging participation by referral bonus. This study introduces the social distance between both referral parties and the certainty or randomness of the referral bonus distribution scheme, as well as conducts a quasi-experimental study on the complete process of social referrals based on prospect theory. The results show that the referral parties are firstly affected by social distance, and the small social distance is conducive to the achievement of social referrals. Social distance moderates the proposers' and responders' behavior. When the social distance is small, both parties of the social referral tend to choose a random bonus distribution scheme, which is consistent with the risk preference behavior predicted by prospect theory. When the social distance is large, both parties of social referrals tend to choose a deterministic bonus distribution scheme, consisting with the risk-averse behavior predicted by prospect theory. As the social distance decreases, friends’ reference point changes from individual profit to collective interest, showing that the risk aversion of personal profit has changed to the risk preference with the basis for ensuring collective interest. The referral bonus distribution scheme has changed from certainty to randomness.