Live streaming selling under consumers' limited attention

In recent years, many sellers have marketed products through third-party live streamers and shared revenue with them. During live streaming, streamers provide both informative content (e.g. product attributes) and non-informative content (e.g. social interactions) to entertain consumers, with gift-giving serving as an additional revenue source. This paper examines consumers' limited attention to these two types of content within a game-theoretic framework. We show that when gift-giving efficiency and consumers' attention to social-interaction content are sufficiently low, or when gift-giving efficiency is relatively low, greater consumer attention to social content induces the streamer to increase social-interaction effort while product demand declines. This occurs because reduced attention to product quality lowers consumers' perceived value from product information, which outweighs the increased value from social interactions. Moreover, we find that consumers' gift-giving behaviour can harm the streamer. When the effort cost coefficient is sufficiently low, gift giving induces the seller to raise the price by anticipating and free-riding on the streamer's higher effort response. If the gift income and increased commissions cannot offset this higher effort cost, the streamer's profit decreases. Finally, we consider three extensions: (1) endogenous commission rate negotiation; (2) optimisation of consumers' attention allocation; and (3) alternative decision sequences for effort and pricing.