Deterring online advertising fraud through optimal payment in arrears
By: Benjamin G. Edelman
Contributors: Harvard Business School
Edition: Rev.
Series: Working paper / Harvard Business School -- 08-072; Working paper (Harvard Business School) -- 08-072
Publisher: Harvard Business School
Published: 2008
Place of publication: Boston]
Language: eng
Number of pages: 20
Description: I develop a screening model with delayed payments and probabilistic delayed observation of agents' types. I derive conditions in which a principal can set its payment delay to deter rogue agents and to attract solely or primarily good-type agents. Through the savings from excluding rogue agents, the principal can increase its profits while offering increased payments to good agents. I apply the model to online advertising markets widely perceived to be a hotbed for fraud. I estimate that a leading affiliate network could have invoked an optimal payment delay to eliminate 71% of fraud without decreasing profit.
Notes: Revision of: Optimal deterrence when judgment-proof agents are paid in arrears - with an application to online advertising fraud. c2008.

"Revised August 2008"--Publisher's web site.

Includes bibliographical references.