An evolution analysis of living streaming governance: Deceptive advertising and non-compliant operation

The live streaming e-commerce industry has experienced rapid development, emerging as a pivotal channel for consumer purchasing and brand marketing. Nonetheless, this growth has concurrently revealed a spectrum of challenges, including deceptive advertising by streamers, non-compliant operational practices by merchants, and difficulties in effective governmental regulation. This study develops an evolutionary game-theoretic model encompassing three key stakeholders: streamers, merchants, and the government, with the objective of elucidating the stable evolutionary strategies of each agent as well as the overall system dynamics. Furthermore, the analysis investigates the impact of merchant return policy and consumer search behavior on the system’s evolutionary trajectory and convergence velocity. The findings uncover a nuanced incentive mechanism linking streamers’ truthful advertising to merchants’ compliance behaviors. Notably, truthful advertising does not uniformly promote compliance: when profits derived from compliant operations surpass those from non-compliant activities, truthful promotion may paradoxically amplify merchants’ incentives to act non-compliantly; conversely, if compliant profits are comparatively lower, truthful advertising tends to encourage compliance. Additionally, we also show that a higher commission rate for the streamer tends to induce merchants’ non-compliance behavior, however, a lower commission rate might strengthen merchant compliance incentive. The results further reveal asymmetric sensitivities among participants: merchants exhibit greater responsiveness to variations in governmental penalties than to changes in commission rates, while streamers display heightened sensitivity to commission rate adjustments and factors related to deceptive advertising. Lastly, we find that while the emergence of return policy and consumer search does not alter long-term equilibria, it significantly affects the speed of reaching different equilibrium outcomes.