Article

Journal of Marketing Research

2021, Vol. 58(3) 417-438
Happiness Begets Money: Emotion ª American Marketing Association 2021
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and Engagement in Live Streaming sagepub.com/journals-permissions

DOI: 10.1177/00222437211002477
journals.sagepub.com/home/mrj

Yan Lin, Dai Yao, and Xingyu Chen

Abstract
Live streaming offers an unprecedented opportunity for content creators (broadcasters) to deliver their content to consumers
(viewers) in real time. In a live stream, viewers may send virtual gifts (tips) to the broadcaster and engage with likes and chats free
of charge. These activities reflect viewers’ underlying emotion and are likely to be affected by the broadcaster’s emotion. This
article examines the role of emotion in interactive and dynamic business settings such as live streaming. To account for the
possibility that broadcaster emotion, viewer emotion, and viewer activities influence each other, the authors estimate a panel
vector autoregression model on data at the minute level from 1,450 live streams. The results suggest that a happier broadcaster
makes the audience happier and begets intensified viewer activities, in particular tips. In addition, broadcasters reciprocate viewer
engagement with more smiles. Further analyses suggest that these effects are pronounced only after a live stream has been active
for a while, and they manifest only in streams by broadcasters who have more experience, receive more tips, or are more popular
in past live streams. These results help platforms and broadcasters optimize marketing interventions such as broadcaster emotion
enhancement in live streaming and quantify the financial returns.

Keywords
digital marketing, emotion, engagement, live streaming, social media, text analysis, video analysis
Online supplement https://doi.org/10.1177/00222437211002477

Live streaming, as a new channel that enables users to interact
with each other over the internet in real time, has been gaining
traction among major social media platforms. For example,
YouTube took a major step in April 2011 by launching live
streaming functionality to allow its partners to broadcast live
content on the platform to its vast global audience (Garrahan
2011). Twitter, which initiated microblogging, expanded its
business in May 2015 to live streaming with a dedicated app
called Periscope (Kharpal 2015). Facebook followed in August
2016, first experimenting with its Facebook Watch video
streaming service among selected users and then providing it
to all users in January 2017 (Bell 2016). In addition to these
social network titans, which had already accrued a sizable user
base before venturing into live streaming, other companies
have started businesses from scratch and developed into giants
in this market. A notable example is Twitch, which was
launched as a spin-off of the now-defunct Justin.tv in June
2011 to focus on video game live streaming and quickly
exploded. By February 2014, it had become the fourth-largest
source of internet traffic in the United States, which led to its
acquisition by Amazon in August 2014.
A typical live stream features one broadcaster who creates
and delivers content to the audience in real time. Viewers join
the live stream to consume the content. During the content
consumption process, they also engage with the broadcaster
in various ways that help shape the content generation process.
Some engagement activities are nonmonetary, such as chatting
via text with the broadcaster or other viewers in the stream and
sending likes to the stream. Another engagement activity is
tipping, where viewers send the broadcaster virtual tokens or
gifts they have purchased from the platform with real money.
Viewers can choose when and how much to tip the broadcaster
at any point in time during a live stream, paralleling the pay-
what-you-want (PWYW) business model, which has been
widely adopted by firms and rigorously scrutinized by aca-
demics (e.g., Chen, Koenigsberg, and Zhang 2017; Kim, Nat-
ter, and Spann 2009; Jung et al. 2014; Schmidt, Spann, and
Zeithammer 2015). Viewers often engage in these monetary
and nonmonetary activities multiple times throughout their
stays in a live stream. As major social platforms continue to
Yan Lin is Assistant Professor, Shenzhen Audencia Business School, Shenzhen
University, China (email: linyan@szu.edu.cn). Dai Yao is Assistant Professor,
NUS Business School, National University of Singapore, Singapore (email:
dai.yao@nus.edu.sg). Xingyu Chen (corresponding author) is Associate
Professor, College of Management, Shenzhen University, China (email:
celine@szu.edu.cn).
418
embrace this technology-enabled new channel, and the busi-
nesses using it are expected to prosper, it has become critical to
understand the interactions and coevolution of viewer and
broadcaster behaviors in such an interactive and dynamic
environment.
The extant research on PWYW has usually studied its
implementation in offline business contexts, including restau-
rants, theaters, shopping malls, and museums, and has exam-
ined various drivers for customers to make payments to product
or service providers under this pricing practice.1 Customers
may decide to pay nonzero prices due to their personal traits
(e.g., altruism), habits, emotion, satisfaction, and loyalty
(Gneezy et al. 2010; Kim, Natter, and Spann 2009). Customers
may also be motivated or incentivized to make payments by
fairness concerns (Chen, Koenigsberg, and Zhang 2017; Kim,
Natter, and Spann 2009), social norms (Feldhaus, Sobotta, and
Werner 2018; Jung et al. 2014; Jung, Perfecto, and Nelson
2016), reference prices (Jung et al. 2014; Jung, Perfecto, and
Nelson 2016; Kim, Kaufmann, and Stegemann 2014; Park,
Nam, and Lee 2017), and social distance between themselves
and the receiver (Kim, Kaufmann, and Stegemann 2014),
among other reasons. Researchers have also begun to examine
the application of PWYW in online settings. For example,
Elberse and Bergsman (2008) studied the band Radiohead’s
use of PWYW for its 2007 album. Chen, Koenigsberg, and
Zhang (2017) discussed online platforms using PWYW, such
as the Humble Bundle website using it to sell software. In
addition, Spann, Stich, and Schmidt (2017) explored the pos-
sibility of adopting PWYW in open access publishing.2
Live streaming differs from existing PWYW applications in
three major aspects. First, the detailed tipping behaviors of all
viewers are publicly observable in live streaming, whereas in
other PWYW applications, the amount of payment is usually
private. The public announcement of tipping in live streaming
makes it possible for viewers both to derive social image–based
utility and to free ride other viewers. For those who tip the
broadcasters, the public announcement of their tips allows
them to be perceived by their peers as rich and generous. For
those who appreciate the performance, seeing that others have
already tipped allows them to free ride other viewers’ tips
without making their own contribution. Second, in addition
to tipping, viewers can engage in nonmonetary activities, such
as liking and chatting. These activities are influenced by and
may influence broadcaster behaviors, giving rise to a dynamic
system in which multiple key variables coevolve together. To
measure the impact of one variable on another, we must
account for all interactions among the variables rather than
examining each relationship individually. In addition, as
1
Note that the literature on PWYW differs from that on tipping in service
marketing (which has been summarized well in Azar [2020]), as the former
examines the payment decisions customers make under PWYW, whereas the
latter examines payment decisions on top of the normal prices that firms set for
their products or services.
2
For a good review of the literature on PWYW as well as other customer
participative pricing mechanisms, see Spann et al. (2018).
Journal of Marketing Research 58(3)
opposed to offline business contexts, live streaming as an
online business facilitates more detailed data collection. For
example, the video clip of a live stream can be recorded and
efficiently analyzed to extract the emotion of the broadcaster
using state-of-the-art machine learning algorithms (e.g., deep
neural networks). We can also probe the viewers’ emotions by
analyzing their chats in the live stream. These novel and
unstructured data enable us to link the emotions of content
providers (broadcasters) to viewers’ payment decisions in the
context of live streaming at the aggregate level, which other
PWYW applications have not yet examined.
In this research, we augment the PWYW literature by exam-
ining and quantifying the effect of emotion in interactive and
dynamic business contexts such as live streaming. Specifically,
we test whether broadcasters’ emotions influence viewers’
emotions, and vice versa. We further examine the effects of
both broadcaster and viewer emotions on viewer engagement,
including both free (i.e., chatting and liking) and paid (i.e.,
tipping) activities and viewer participation (i.e., the number
of viewers). In addition, we investigate the effects of viewer
engagement and participation on broadcaster emotion. To
account for autocorrelation of the time series and the possibility
that all these key variables are likely to influence each other,
we employ a panel vector autoregression model (PVAR; for
details, see Love and Zicchino [2006]) to capture the interde-
pendent and dynamic nature of this business context and to
quantify and disentangle both the immediate and relatively
longer-lasting effects of one variable (e.g., broadcaster emo-
tion) on other variables.
The PVAR model is estimated on data from a popular live
streaming platform in China that ranked among the top 30 in
the market as of July 2019.3 The data comprise 1,450 live
streams collected over a two-week period in January and Feb-
ruary 2018. For each live stream, we recorded the number of
viewers, amount of tips, chat details, and number of likes at the
minute level. We also obtained video clips of all the streams,
which enabled us to transcribe the scripts of each broadcaster
and recognize their facial expressions. Our main model con-
cerns six key variables that are typical in a live stream and are
measured as follows: BCEmotion is the average of the broad-
caster emotion across all the seconds in a minute, where the
broadcaster’s emotion is calibrated on the basis of facial
expression in each second; ViewerEmotion is the viewer emo-
tion calibrated from all the viewer chats pooled together during
a minute; AmountTip, LenCmt, and NumLikes are three vari-
ables of viewer engagement activities in a minute that capture
the amount of tips, the count of words in the comments, and the
number of likes, respectively; and NumViewers is the number
of viewers recorded at the end of a minute.
3
The platform ranked between 25th and 30th as of July 2019, as reported by
China Internet Weekly and eNet, both of which are large media outlets focused
on internet business in China. Their report about the rankings is available at
http://www.enet.com.cn/article/2019/0716/A20190716948154.html (in
Chinese).
Lin et al. 419

Our study yields interesting results regarding live streaming

and the application of PWYW to this business context. First,
we find that positive broadcaster emotion induces positive
viewer emotion, and similarly, positive viewer emotion
enhances broadcaster emotion, suggesting that the two parties
influence each other (Russell 2003), leading to emotional
empathy between them (Escalas and Stern 2003). Second, we
find that as the broadcaster becomes happier, all viewer activ-
ities, including tips, chats, and likes, intensify. Third, we find
that viewer emotion has positive effects on all viewer activities
as well. In general, viewers send more tips, supply more com-
ments, and press the “Like” button more often when they are
experiencing a happier mood. These results are consistent with
findings in the literature on emotional contagion in business
settings and its effects on either customer attitudes toward the
products (e.g., Howard and Gengler 2001) or behaviors such as
providing public services or donations (e.g., Liang, Chen, and
Lei 2016). Fourth, by using the PVAR model, we can quantify
the effects among key variables over a relatively longer period
(e.g., over 10 or 20 minutes). These relatively longer-lasting
effects on emotional contagion, customer attitudes, or customer
behaviors have not yet been investigated in the extant literature
to the best of our knowledge. For example, we find that broad-
caster emotion influences viewer behaviors, in particular
viewer tips, even after 20 minutes. Fifth, estimating the PVAR
model with rolling windows (e.g., Pauwels and Hanssens 2007)
in which fixed-length periods are used leads to the finding that Figure 1. A screenshot of an ongoing live stream.
these effects occur only after a live stream has been active for a
while and not from the very beginning. Finally, we find strong
enthrall the audience and garner new viewers. Platforms allow
broadcaster heterogeneity: only broadcasters who had more
viewers to converse using text but not voice, which augments
experience, received more tips, or were more popular in past
the content in the live stream. Meanwhile, viewers watch and
live streams can leverage their smiles to increase viewer tips.
consume the content that is continuously generated in the
The remainder of the article is structured as follows. We first
stream. Viewers do not pay an entry fee for a live stream but
introduce the live streaming setting briefly and relate our study
are encouraged to send virtual gifts (i.e., tips) to reward the
to several research streams in the literature. We then discuss the
broadcaster. In addition to this tipping behavior, viewers can
details of the data and methodology, present the main results,
also express their attitude or gratitude by sending likes into the
and conduct several robustness tests. Finally, we discuss the
stream. Figure 1 provides a snapshot of a typical ongoing live
implications of our study for practitioners as well as the limita-
stream from viewers’ perspective.
tions and potential directions for future research.

Research Background Relevant Literature

The Live Streaming Setting
In a typical live stream, a broadcaster sets up the video stream,
which is essentially a virtual showroom hosted on a live
streaming platform. All ongoing live streams are usually dis-
played in chronological, alphabetical, or another order. Upon
seeing the stream, any platform user can join it free of charge,
which means that the user enters the virtual showroom and is
immediately exposed to whatever is happening inside. The
broadcaster interacts with existing and new viewers in this
virtual space in real time. Viewers may interact with each other
as well. The broadcaster generates various types of content in
line with their expertise (e.g., hosting talk shows, singing, dan-
cing, playing musical instruments, playing video games) to
Our article is relevant to several streams of research. First, it is
related to the growing research on live streaming. A large body
of this literature focuses on understanding the motivational
factors of viewers’ various behaviors (e.g., watching, chatting,
tipping) in this context. A general conclusion from existing
research is that users’ motivations are rather complex, includ-
ing both intrinsic and extrinsic factors. For example, Hilvert-
Bruce et al. (2018) identified six motivations that explain
viewer engagement activities: social interaction, sense of com-
munity, meeting new people, entertainment, seeking informa-
tion, and seeking support. Hu, Zhang, and Wang (2017) found
that viewers’ community identification with both broadcasters
and their peer viewers is associated with their watching inten-
tion. Some research has examined motivations associated with
420
tipping behavior, which is the primary source of income for
both broadcasters and platforms. For example, Wohn, Free-
man, and McLaughlin (2018) conducted an interview-based
study to show that viewers give money for both intrinsic
(e.g., emotional attachment, interaction) and extrinsic (e.g.,
rewarding the broadcaster for the entertainment received,
encouraging future content provision) reasons. Most of these
studies were qualitative in nature or used surveys for data col-
lection. In a few studies that collected data in the field, engage-
ment activities were examined independently (e.g., Lu et al.
2020), which ignores the interdependencies and dynamics of
broadcasters’ and viewers’ various activities within a live
stream.4 Our study contributes to this literature by examining
the role of the emotion of the service provider (i.e., the broad-
caster) in facilitating the activities of the customers (i.e., the
viewers) at the aggregate level. In addition, our modeling
framework enables us to quantify not only the immediate
effects of broadcaster emotion but also the relatively longer-
lasting effects, which have been lacking in previous research.
Our study is also closely related to research scrutinizing the
PWYW pricing model in various business contexts. A central
question in the PWYW literature and the related voluntary
market payment literature concerns the factors underlying will-
ingness to pay and the amount paid (Natter and Kaufmann
2015). The extant research has uncovered several factors, such
as social norms (e.g., Regner 2015), social image (e.g., Lu et al.
2020), and status (Gravert 2017), for voluntary paying beha-
viors. Nevertheless, this literature has overlooked at least two
factors. First, voluntary paying behavior occurs not indepen-
dently but in combination with other customer behaviors—and,
on some occasions, firm behaviors as well. Investigating pay-
ing behavior in isolation could potentially lead to a biased
understanding of its triggers. To this end, we take into account
variables on both the broadcaster and viewer sides that may
affect viewer tips, and we provide evidence that broadcaster
emotion, an important factor on the broadcaster side, signifi-
cantly affects the payment of viewer tips. Second, most busi-
ness contexts that use PWYW and have been examined by
academics have a static setting in which each customer makes
the payment decision once. However, in business contexts such
as live streaming, viewers interact with the broadcaster in real
time during their entire stay in the live stream. Thus, engaging
activities take place throughout a live stream, and multiple
tipping events might occur. It is thus also critical to understand
whether the motivational factors drive continuing payments
over time under PWYW, and the extant research remains silent
on this question. Due to the nature of the data in the current
study (i.e., at the aggregate level only), we could not analyze
individual viewer activities to provide a conclusive assessment.
Nonetheless, our results suggest that the effect of broadcaster
emotion on attracting viewer tips in live streams, from the
4 5
We have conducted extensive literature reviews on each research stream
related to our study and present the results in three literature review tables in
Web Appendix A.
Journal of Marketing Research 58(3)
perspectives of the broadcaster and the platform, is nontransi-
ent and can last beyond 20 minutes.
Our article is also linked to research that examines the roles
of the emotions of service providers and customers in business
settings. Previous research has established that people may
vicariously share the emotions of others in social interactions
and has termed such sharing “emotional empathy” (Escalas and
Stern 2003). Previous research has also examined the contagion
of emotion and its impact on decision makers’ attitudinal
responses and behaviors. For example, Howard and Gengler
(2001) found, in a laboratory setting, that receivers can mimic
the smiles of senders and experience a happy emotion, which
further leads them to have a positive attitudinal bias toward a
product. Pugh (2001) noted that customers can catch the pos-
itive affect of frontline workers, resulting in higher evaluations
of service quality. Hennig-Thurau et al. (2006) discovered that
the authenticity of employee emotion rather than the extent of
employee smiling can influence customer emotion and, subse-
quently, customer assessments of a service interaction and their
relationship with the service provider. Liang, Chen, and Lei
(2016) proposed an “inspiration-helping” hypothesis and estab-
lished that positive emotion can inspire people to donate; when
positive emotion was used in tandem with negative emotion, its
persuasive power was even stronger. Using large and real-life
field data, this research adds to the literature by documenting
the existence of emotional contagion in the burgeoning busi-
ness context of live streaming. It also documents the effects of
the emotions of both the broadcaster and the viewers on viewer
engagement activities in a live stream, in particular viewer
tips. In addition, whereas extant studies have examined only
the immediate effects of emotion, our research investigates
both the immediate and the relatively longer-lasting effects
of emotion.
Data and Methodology
We obtained our data from an online live streaming service
provider in China, which is affiliated with a large user-
generated content (UGC) platform and started in 2016 when
live streaming was taking off in China. The UGC community is
home to people who like to share funny and embarrassing
stories about themselves and others and is one of the largest
of its kind (Chen et al. 2019). The live streaming service is also
popular and ranked among the top 30 in this market as of July
2019. The data contain details of 1,450 live streaming sessions
randomly drawn from all active sessions that started between 8
and 10 P.M. on the platform each day over two weeks from
January 31 to February 13, 2018.5 For each live stream, we
collected the amount of viewer tips, details of viewer chats, and
number of viewer likes in each minute. We also recorded
videos of all the live streams, which enabled us to analyze the
The platform suggested the two-hour sampling time window because both
broadcasters and viewers are most active during this time period, and their
behaviors during this time period are of primary interest to the platform.
Lin et al.
content of the live stream. The length of the live streams,
plotted in Figure WB1 in Web Appendix B, is highly skewed.
While some sessions lasted almost 800 minutes, the majority
lasted less than 120 minutes (highlighted in orange). We there-
fore focused on the first 120 minutes of the sessions.6
Our main analysis was conducted at the minute level. For
each minute in each live stream, we assembled structured data
such as the amount of tips, the count of words in the comments,
and the number of likes sent by the audience. We also used
machine learning algorithms to analyze the unstructured data,
including video clips of the live streams and the detailed viewer
chats, and constructed moment-to-moment measures of the
emotions of both broadcasters and viewers (Zhang, Wang, and
Chen 2020). Our final data have an unbalanced panel structure,
wherein cross-sectional units are live streams and longitudinal
units are time in minutes, due to the varying durations of dif-
ferent live streams. Next, we discuss the process to construct
the focal variables and provide evidence of the interdependen-
cies of the variables. We then establish the stationarity of the
data and test the endogeneity of the focal variables, which helps
us determine both whether a PVAR model is appropriate for the
data and which variables should be included as dependent vari-
ables. We also determine the optimal number of lags for the
PVAR model.
Variables and Summary Statistics
Broadcaster emotion. We measured emotion using the broadcas-
ter’s facial expressions. We employed a pretrained deep neural
network that produces seven probabilities for an input image,
each representing the likelihood that the image shows a partic-
ular type of emotion out of seven types: happiness, surprise,
disgust, anger, sadness, fear, and neutrality. We used the deep
neural network to calibrate the probability of the broadcaster
being happy in every second and used the second-level data to
construct the broadcaster emotion (BCEmotion) at the minute
level in our main analysis.7 This variable measures the average
probability of the broadcaster being happy across all seconds in
a minute, as happiness is deemed the most important type of
emotion in the business context of live streaming and is the
focal variable of the article. We employed a host of alternative
approaches to construct this key variable of broadcaster emo-
tion and test the robustness of our main results, including mea-
suring it at the half-minute level rather than the minute level,
loading into it both happiness and sadness, loading into it both
valence and arousal, and constructing it on the basis of the
broadcasting scripts rather than the broadcasters’ facial expres-
sions. We discuss details of these tests in the “Robustness
Checks” section.
6
Using different cutoff values (such as 90 or 150 minutes) generated
qualitatively consistent results, which are available from the authors upon
request.
7
The details of the algorithm and check of its reliability appear in Web
Appendix C.
421
Viewer emotion. We collected all live comments posted by the
audience in each minute. We used the Linguistic Inquiry and
Word Count (LIWC) text analysis tool (Pennebaker et al. 2015)
to measure the sentiment of the live comments and denoted it as
viewer emotion. The LIWC program reads a text and compares
each word in the text with built-in dictionaries. We chose this
program because it is convenient to use and has proven useful
in a wide range of studies in marketing (e.g., Ertimur and
Coskuner-Balli 2015; Ransbotham, Lurie, and Liu 2019; Yaz-
dani, Gopinath, and Carson 2018) and other disciplines (e.g.,
Goes, Lin, and Yeung 2014; Li 2008; Yin, Bond, and Zhang
2014, 2017). The program originally had built-in dictionaries
only for English texts, which were subsequently translated into
other languages, including the simplified Chinese version suit-
able for our business context.8 A well-known problem for Chi-
nese, as opposed to English, is that Chinese words in a text are
concatenated to each other. Therefore, we had to segment the
texts and add white spaces between words before performing
any follow-up natural language processing tasks. This process
is commonly referred to as Chinese segmentation (Peng, Feng,
and McCallum 2004). To segment the texts, we used the PKU-
SEG toolkit, which provides a word segmenter tailored for
online and informal language (Luo et al. 2019).9 We then used
LIWC to extract viewer emotion from the segmented words.
The LIWC results include two numbers representing the extent
of positive and negative emotion exhibited in the text. The
results also include an integrated variable called Tone, which
combines the two numbers and indicates a more positive emo-
tion when it is greater than 50 (Pennebaker et al. 2015). We
used this integrated variable in our analysis and named it
ViewerEmotion.
Viewer tips. Viewers can tip the broadcaster during their stay in
the live stream. The tips are denominated in the platform’s
electronic currency and can be exchanged for real money at a
rate of approximately 100 tips for 1 Chinese yuan (CNY). Tips
from live streams usually constitute a significant source of
income for broadcasters. When a broadcaster exchanges tips
for cash with the platform, a higher exchange rate is used (e.g.,
150 tips for 1 CNY), enabling the platform to take a share of the
revenue. We counted the number of tips the broadcaster
received in each minute and divided it by 100 to obtain a
measure of the real money paid by the viewers (AmountTips).
8
The details of this toolkit are available at http://dictionaries.liwc.net.
9
PKUSEG is available at https://github.com/lancopku/pkuseg-python. Other
popular Chinese segmentation tools include the Stanford Word Segmenter
(https://nlp.stanford.edu/software/segmenter.shtml), Jieba Segmenter (https://
github.com/fxsjy/jieba), and THULAC (http://thulac.thunlp.org/). These tools
differ primarily in the underlying programming languages and scope of the
natural language processing tasks to which they can be applied. For Chinese
word segmentation, the performance of the different tools is comparable (for
comparison results, see http://thulac.thunlp.organdhttps://github.com/
lancopku/pkuseg-python). We selected PKUSEG because of our familiarity
with it as well as its capability of dealing with words that are commonly
used online (e.g., “bgm” for “background music,” “233” for laughing, “lol”
for “laughing out loud”).
422 Journal of Marketing Research 58(3)

Table 1. Descriptive Statistics and Correlations.

Mean SD Min Max 1 2 3 4 5 6

1. BCEmotion .103 .140 .000 1.000 1.000

2. ViewerEmotion .256 .356 .000 1.000 .081** 1.000
3. AmountTips .169 3.098 .000 396 .026** .023** 1.000
4. NumLikes .007 .022 .000 .662 .018** .093** .012** 1.000
5. LenCmt .013 .017 .000 1.116 .103** .299** .023** .141** 1.000
6. NumViewers 4.797 5.010 1.000 119 .088** .212** .053** .303** .406** 1.000

**p < .01.

Notes: N(obs) ¼ 105,453 (only from minute 3 to minute 120).

Number of likes. In addition to tipping, viewers can tap the
“Like” button to engage with the broadcaster. Tapping the
“Like” button is not only free of charge but also an effortless
way to express viewer attitude, appreciation, or other feelings
about the broadcaster and the content. We counted the number
of likes received by the broadcaster in a minute and divided it
by 1,000 for scaling purposes (NumLikes).
Length of viewer comments. We also measured another engage-
ment activity of the viewers: viewer chatting, which is free of
charge to viewers but requires them to exert some effort to
compose the chat entries. In particular, we counted the number
of words in the live comments by the audience in a minute and
divided it by 1,000 for scaling purposes (LenCmt).
Number of viewers. Finally, another variable that can be
retrieved and might interact with others in this context is the
number of viewers. The platform helped us record the number
of viewers at the end of each minute in a live stream (Num-
Viewers). Note that this number does not include the viewers
who appeared in the live stream during the minute but left
before the number was recorded.10
Table 1 shows the descriptive statistics and correlations for
these variables across all minutes of all live streams. It is worth
mentioning that viewer engagement activities are generally
highly skewed, which gives rise to popular live streams attract-
ing large amounts of tips, likes, and chats. As we show in
Figure WB2 in Web Appendix B, while 30% of live streams
did not receive a single tip, the top 5% could derive more than
70,000 in tips (or 700 CNY).11 In addition, there were approx-
imately 5 viewers on average in each minute across all minutes
and all live streams, with a maximum of approximately 120
concurrent viewers.
10
The platform could have recorded the number of viewers at the end of each
second in a given minute and taken the average across all the seconds as the
number of viewers for that minute. It also could have recorded the detailed
entry and exit timing of each viewer and calibrated the number of viewers in a
minute. These alternative approaches were not adopted by the firm because
they entailed higher data collection costs.
11
In additional tests (discussed subsequently), we used the logarithm of the
number of tips and removed the top 5% of the live streams. Both analyses
generated results that were qualitatively consistent with our main analysis.
Model-Free Evidence
Table 1 also displays the correlations among the six key vari-
ables constructed in the context. As the table shows, all the
correlations are positive and significant (p < .01), suggesting
that these variables likely move together and influence each
other. Specifically, there is a significant correlation between
broadcaster and viewer emotion (corr ¼ .081), and there are
also significant correlations between broadcaster emotion
and viewer engagement activities, in particular, viewer tips
(corr ¼ .026). In addition, the number of viewers is signifi-
cantly correlated with each of the other variables.
To understand these correlations more intuitively and to
probe the dynamics within the same stream as well as the
differences across streams, we display the evolution processes
of three key variables (BCEmotion, ViewerEmotion, and
AmountTips) over time and up to 120 minutes in three sample
sessions in Figure 2. A few observations can be made about the
plots. First, there is a pattern of positive correlation between
broadcaster emotion and viewer emotion. Viewers in a live
stream are generally happier when the broadcaster is happier,
and similarly, the broadcaster is happier when the audience is
pleased. Second, viewer tips are scattered across the entire
duration of a live stream and exhibit a few spikes. These spikes
seem to either be triggered by heightened broadcaster emotion
(and viewer emotion) a few minutes earlier (e.g., at about min-
ute 20 in the first stream and about minute 50 in the second
stream) or make the broadcaster (and the viewers themselves)
happier in subsequent minutes (e.g., at about minute 40 in the
third stream). This leads to the third observation that the influ-
ences among the variables vary over time in each live stream
and across different live streams.12
These items of model-free evidence motivate us to account
for the interrelationships among these time series to quantify
the influence of one variable on another under the framework
of the PVAR model. The PVAR model is an extension of the
vector autoregression (VAR) model that has been widely used
to model interdependencies among multiple time series (Sims
1980). It assumes that each dependent variable is a function of
12
In additional preliminary analysis, we regress each of the key variables on
the remaining five variables as well as all the lagged variables, using
fixed-effects models. The results are presented in Web Appendix D and lend
additional support to the strong correlations among these key variables.
Lin et al.
Figure 2. Dynamics of variables in sample live streams.
its own past values and the past values of all other dependent
variables (as well as the control variables, if any). The VAR
model has been further extended to panel data (Holtz-Eakin,
Newey, and Rosen 1988). Previous studies have shown the
success of applying both VAR and PVAR models to business
contexts such as online word of mouth and social media (Chae
et al. 2016; Stephen and Galak 2012; Trusov, Bucklin, and
Pauwels 2009; Zhang et al. 2012), corporate social responsi-
bility (Kang, Germann, and Grewal 2016), service crises (Gij-
senberg, Van Heerde, and Verhoef 2015), and sales promotion
(Srinivasan et al. 2004). Our data comprise 1,450 live streams
with detailed records of the key variables in each minute of
each stream. Such a panel structure enables us to control for
stream-specific heterogeneity in the key variables by the use of
fixed effects (Kang, Germann, and Grewal 2016; Love and
Zicchino 2006).
423
Stationarity and Endogeneity
Following existing applications of the PVAR model (e.g.,
Abrigo and Love 2016), we began our empirical analysis with
unit-root tests to check the stationarity of the key endogenous
variables in our panel data. Generalized method of moments
(GMM) estimators suffer from the weak instruments problem
if endogenous variables contain unit roots (Abrigo and Love
2016; Binder, Hsiao, and Pesaran 2005). Because our panel data
were unbalanced, certain popular panel unit-root tests, such as
the Levin–Lin–Chu test and Breitung test, could not be used, as
they require strongly balanced panel data. We thus resorted to
the Fisher-type approach for testing unit roots in panel data
(Kang, Germann, and Grewal 2016). In its execution, this algo-
rithm conducts a unit-root test for each individual stream and
then merges the p-values from the tests to conclude whether a
424 Journal of Marketing Research 58(3)

Table 2. Results of Panel Unit Root Tests. PVAR model for the data. Given the set of six endogenous
variables and P time lags and the absence of other covariates,
Inverse
Variable Chi-Squared p-Value Conclusion
the model can be written as follows:
2 3 2 3
BCEmotioni;t 2 p 3 BCEmotioni;tp
BCEmotion 41,854 .000 Stationary 6 7 b11 bp12 bp13 bp14 bp15 bp16 6 7
6ViewerEmotion 7 6 bp 6ViewerEmotion 7
ViewerEmotion 60,659 .000 Stationary 6 i;t 7 6 21 bp22 bp23 bp24 bp25 bp26 7
76 i;tp 7
6 7 6 p p 7
6 7
6 7 6 7
AmountTips 51,762 .000 Stationary 6 AmountTipsi;t 7 Xp 6 b
6 31
bp32 bp33 bp34 bp35 b36 76 AmountTips
76 i;tp 7
6 7¼ p¼1 6 bp
7
NumLikes 56,568 .000 Stationary 6
6 NumLikesi;t 7
7 6 41 bp42 bp43 bp44 bp45 bp46 76
76 NumLikes 7
7
6 7 6 p p 7 6 i;tp
7
LenCmt 36,070 .000 Stationary 6 7 4 b51 bp52 bp53 bp54 bp55 b56 56 7
4 LenCmti;t 5 p 4 LenCmti;tp 5
NumViewers 21,990 .000 Stationary bp61 bp62 bp63 bp64 bp65 b66
NumViewersi;t NumViewersi;tp
Notes: Number of panels ¼ 1,450; average panel length ¼ 75. H0: All panels þ mi þ eit :
ð1Þ
contain unit roots; Ha: At least one panel is stationary.
In this model, the coefficient matrix of b denotes the para-
specific variable in the panel data passes the unit-root test. As we meters to be estimated that capture the effects of the lagged
show in Table 2, the null hypothesis of having a unit root is endogenous variables, mi captures the panel fixed effects, and
rejected for all six variables. Note that this approach leads to the eit is a vector of the idiosyncratic error terms that are assumed
conclusion that the panel data pass the unit-root test if at least to be zero centered.14
one stream passes the test, or all streams do not have a unit root. To complete the model, we need to determine the optimal
This approach does not guarantee that none of the streams have a number of lags (i.e., the P parameter in the model). A conven-
unit root. In an additional test presented in Web Appendix E, we tional way to select the optimal lag is to use the moment and
performed unit-root tests for the key variables for each stream model selection criteria (MMSC) proposed by Andrews and Lu
separately and checked the results individually. We observed (2001) for GMM models (Abrigo and Love 2016). The criteria
that all the variables passed the unit-root tests for 681 of these are based on the J-statistics of overidentifying restrictions for
1,450 live streams (about 47.0%).13 GMM models (Hansen 1982). These criteria are analogous to
For the PVAR model to accurately capture the influences various information criteria, such as Akaike information criter-
among the endogenous variables, we first had to determine ion (AIC), Bayesian information criterion (BIC), and Hannan–
which variables are endogenous and to be included on the left- Quinn information criterion (HQIC), which are commonly
hand side of the equation, and which variables are not endogen- used to select the best models using maximum likelihood esti-
ous and can be included as control variables. Intuitively, in such mators. Ideally, the optimal lag is the one that minimizes
a dynamic and interactive environment as a live stream, we MMSC BIC , MMSC AIC , and MMSC HQIC together. Table 4
would expect all six variables to be endogenous. Empirically, presents the results of the selection process for our data. As the
the Granger causality test is widely used to establish causality in information criteria in the table suggest, the values of both
time series data (Granger 1969). The basic idea underlying this MMSC AIC and MMSC HQIC are minimized at two lags.
causality concept is that if one variable X Granger-causes Furthermore, MMSC BIC is quite small at two lags and is close
another variable Y, then observing the history of X will help to the minimal value, which is obtained at one lag. We thus
explain the residual variances in Y after accounting for Y’s own used two lags for our main analysis. Subsequently, we discuss
history. A common practice is to apply the test to data with a analyses using two additional models with different numbers of
history, starting from one period and extending to an arbitrary lags to show the robustness of the results.
number of periods (e.g., Trusov, Bucklin, and Pauwels 2009). In
the context of live streaming, there is no a priori knowledge of
how long the history should be. Thus, we performed the causality Empirical Findings
tests for each pair of variables, starting with 1 lag and stopping at
We applied the PVAR model to the live streaming data and
20 lags, beyond which there was no substantive change to any
obtained the coefficient estimates (i.e., the b s), which are
test. We report the smallest p-value from these tests in each cell
displayed in Table 5. Previous research has highlighted that it
of Table 3. As the table shows, Granger causality is established
for most of the pairs except that length of viewer comments does
not Granger-cause the amount of tips (p ¼ .100). 14
Note that all the endogenous variables are stationary rather than trend
stationary; thus, there is no need to include the time trends, which are
usually included as exogenous variables, in our PVAR model (e.g., Trusov,
Model Specification Bucklin, and Pauwels 2009). We could not add seasonal dummies either (e.g.,
Trusov, Bucklin, and Pauwels 2009; Zhang et al. 2012) due to the short time
The presence of endogeneity in all the variables in the data and span of data collection. In addition, minute dummies are not appropriate
the stationarity of these time series justify the choice of the because of the differences across live streams (Figure 2). Because the
endogenous variables may Granger-cause each other, and the influences
among them (both immediate and relatively longer lasting) are most often
13
Further analysis using only the live streams for which all the key variables the primary focus, it is not unusual to see VAR or PVAR models without
pass the unit-root tests generated qualitatively the same results presented in the exogenous variables in the literature (e.g., Gijsenberg, Van Heerde, and
main text. These tests are available from the authors upon request. Verhoef 2015).
Lin et al. 425

Table 3. Results of Granger Causality Tests.

DV (Column Name) Is Caused by (Row Name) BCEmotion ViewerEmotion AmountTips NumLikes LenCmt NumViewers

BCEmotion — .001** .023* .034* .007** .005**

ViewerEmotion .000** — .050* .022* .000** .000**
AmountTips .000** .002** — .000** .002** .000**
NumLikes .005** .000** .014* — .000** .000**
LenCmt .000** .000** .100 .001** — .000**
NumViewers .000** .000** .014* .000** .000** —

*p < .05.
**p < .01.
Notes: DV ¼ dependent variable. Tests were done with up to 20 lags, and we report the smallest p-values of the chi-square tests across the models with 20
different lags.

Table 4. MMSC for Optimal Lag Selection.
Lag MMSCBIC MMSCHQIC MMSCAIC
1 1,256.37 309.22 105.02
2 1,144.49 434.13 123.45
3 781.68 308.11 100.98
4 394.65 157.86 54.30
Notes: MMSCBIC, MMSCHQIC, and MMSCAIC are moment model selection cri-
teria analogous to the widely used likelihood-based model selection criteria: the
Bayesian information criterion (BIC), the Hannan–Quinn information criterion
(HQIC), and the Akaike information criterion (AIC) (Andrews and Lu 2001).
is difficult to interpret the full impact of one variable on another
from the estimated coefficients alone (Sims 1980). To capture
all the possible routes for one variable to influence another,
researchers usually resort to using impulse response functions
(e.g., Kang, Germann, and Grewal 2016; Trusov, Bucklin, and
Pauwels 2009; Zhang et al. 2012) to capture both direct and
indirect influences.
An impulse response function (IRF) illustrates how the
shock of one standard deviation on one variable affects another
variable over time, with other variables in the system remaining
unchanged. We adopted the generalized IRF (GIRFs; Pesaran
and Shin 1998; Trusov, Bucklin, and Pauwels 2009) rather than
the orthogonalized alternative. The former approach imposes
no arbitrary causal ordering among the endogenous variables
and allowed us to calibrate the effects of simultaneous shocks
by making direct use of the residual variance–covariance
matrix of the PVAR model (Dekimpe and Hanssens 1999).15
As discussed in Pesaran and Shin (1998), both approaches shed
some light on the short- and long-term effects of changes in one
variable on another for any nondiagonal error variance–covar-
iance matrix. In addition, IRFs calculated with the two
approaches coincide in the cases for the first equation of the
model and deviate only in those for other equations. For our
application, we adopted GIRFs due to the lack of obvious
causal ordering among the six key variables.
15
For exact specifications of the two approaches, see Equations 7 and 10 in
Pesaran and Shin (1998).
Drawing on a particular IRF, we could calculate the cumu-
lative IRF to assess the total response of one endogenous vari-
able to a shock on another variable up to a given time period.
We illustrate both GIRFS and cumulative IRFs in Figure 3,
using four pairs of variables to delineate the key relationships
between emotion and engagement in live streaming. We use a
time window of 20 minutes to illustrate the IRFs to be consis-
tent with the previously performed Granger causality tests. The
choice of 20 minutes also helps shed light on these effects in
relatively longer time periods given the dynamic nature of live
streaming. We draw the 95% confidence intervals in all the
plots with Monte Carlo simulations using 1,000 samples for
each response. To facilitate discussion, we also present the
cumulative responses of all variables in relatively shorter time
periods (i.e., 2 and 5 minutes) as well as longer time periods
(i.e., 10 and 20 minutes) in Table 6.
Main Results for Emotion and Engagement
Panels A and B in Figure 3 visualize the responses of viewer
and broadcaster emotion, respectively, to shocks in the emotion
of the other. Panels C and D show the responses of viewer tips
and number of viewers to shocks in broadcaster emotion,
respectively. Within each panel, the first plot displays the
GIRF, and the second shows the cumulative GIRF. Note that
in a six-equation PVAR model, there are 36 IRFs and their
cumulative versions. Because each IRF takes into consider-
ation not only the direct response of an endogenous variable
to the shock of another variable but also the indirect responses
(e.g., via a third variable that also responds to the shock), we
can examine and discuss each panel in isolation from the rest.
Broadcaster and viewer emotion. We first investigated the
responses of viewer and broadcaster emotion to shocks in the
emotion of the other (i.e., Panels A and B, respectively), which
sheds light on whether the two parties in a live stream influence
each other in terms of emotion. Note that the standard deviation
of viewer emotion is much larger than that of broadcaster emo-
tion (.354 vs. .140, as shown in Table 1).
Comparing the first plot in each of the two panels leads us to
two observations. First, for a relatively smaller shock on broad-
caster emotion (i.e., .140), viewer emotion is immediately
426 Journal of Marketing Research 58(3)

Table 5. Estimation Results from the PVAR Model.

Dependent Variable

BCEmotioni,t ViewerEmotioni,t AmountTipsi,t NumLikesi,t LenCmti,t NumViewersi,t

BCEmotioni;t1 .4496** .0408** .3478* .0031** .0008 .1010

(.0082) (.0146) (.1364) (.0009) (.0006) (.0910)
BCEmotioni;t2 .2477** .0242 .1333 .0017* –.0001 –.0304
(.0069) (.0135) (.1078) (.0008) (.0005) (.0800)
ViewerEmotioni;t1 .0175** .1180** .0623 .0004 .0013** .0967**
(.0012) (.0048) (.0420) (.0003) (.0002) (.0247)
ViewerEmotioni;t2 .0150** .0661** .0513 .0007** .0003 –.0087
(.0012) (.0045) (.0401) (.0003) (.0002) (.0217)
AmountTipsi;t1 .0003** .0008 .0987** –1.82e5 –4.94e6 .0158**
(.0001) (.0004) (.0286) (2.51e5) (1.32e5) (.0045)
AmountTipsi;t2 –4.92e5 –.0002 .0294 –4.49e5 1.52e5 .0054
(.0001) (.0004) (.0200) (2.55e5) (1.18e5) (.0033)
NumLikesi;t1 .0271 .3274** –.0224 .4188** .0088** 2.9239**
(.0171) (.0702) (.7165) (.0146) (.0025) (.4346)
NumLikesi;t2 –.0019 .0156 .6147 .0671** .0020 –.8631*
(.0179) (.0675) (.8377) (.0110) (.0025) (.4371)
LenCmti;t1 .3044** 1.5958** .7393 .0270** .3296** 9.6095**
(.0500) (.2044) (1.4827) (.0080) (.0396) (1.3582)
LenCmti;t2 .1464** .8096** 1.4561 .0047 .1922** –1.5022*
(.0408) (.1779) (1.3035) (.0075) (.0254) (.7515)
NumViewersi;t1 .0052** .0088** .0448* .0009** .0006** .6607**
(.0005) (.0016) (.0195) (.0001) (.0001) (.0217)
NumViewersi;t2 .0028** .0016 .0042 .0004** –2.68e5 .1953**
(.0003) (.0011) (.0138) (.0001) (.0001) (.0155)

Stream fixed effects Yes

N(obs) 104,440
*p < .05.
**p < .01.
Notes: Robust standard errors clustered by streams are in parentheses.

boosted by approximately .01, whereas for even a relatively
larger shock on viewer emotion (i.e., .354), broadcaster emo-
tion is immediately increased by less than .005. This suggests
that in the short term (i.e., immediate or within a few minutes),
broadcaster emotion has a relatively larger influence on viewer
emotion than the other way around. Second, the first plot in
Panel A clearly shows that the response of viewer emotion to
the shock on broadcaster emotion becomes 0 at approximately
minute 10, while the first plot in Panel B suggests that the
response of broadcaster emotion to viewer emotion is nonzero
even at minute 20. This suggests that the former is only short-
lived, whereas the latter is relatively longer lasting. These
observations are further confirmed by the second plot in each
panel. Specifically, the cumulative response of viewer emotion
to the shock of broadcaster emotion (i.e., the second plot in
Panel A) seems to become satiated quickly, hovering at a level
of approximately .06 after minute 15 and ultimately reaching
.062 by minute 20 (the first row and second column in the last
panel of Table 6), while the cumulative response of broadcaster
emotion to the shock of viewer emotion (i.e., the second plot in
Panel B) reaches approximately .093 by minute 20 (the second
row and first column in the last panel of Table 6, up from .073
by minute 10) and is not yet satiated.
These findings might be rationalized as follows. First, the
broadcaster as the host of the live stream always stays in the
stream, while viewers may enter and exit the live stream, result-
ing in different compositions across different minutes. Second,
they play different roles in the live stream: the broadcaster is
the provider of the content and may actively engage with view-
ers in live streaming, whereas viewers collectively are the con-
sumers of the content and often follow whatever happens in
the stream.
Broadcaster emotion draws viewer tips. Viewer tips are important
to broadcasters and the platform, as they are the primary rev-
enue source. The plots in Panel C of Figure 3 and the results in
Table 6 demonstrate the possibility of broadcasters manipulat-
ing their emotion, or smiles, to draw more viewer tips. In
particular, the shock on broadcaster emotion (i.e., .140) is
found to boost viewer tips by .189 CNY in just two minutes.
To put the number into perspective, the average amount of tips
per minute is only .167 CNY across all the streams (Table 1).
The first plot in Panel C suggests that this effect becomes
nonsignificant after approximately 7 minutes and becomes
almost 0 by minute 20. The cumulative effect displayed on the
second plot in the same panel increases to .331 CNY in 10
Lin et al.
Figure 3. Selected IRFs and cumulative IRFs over time.
minutes and further to .371 CNY in 20 minutes (column 3 in
Table 6). These observations indicate that happier broadcasters
can potentially draw more viewer tips, which aligns with find-
ings in previous studies that positive emotion leads to a positive
evaluation of service quality (e.g., Pugh 2001) and facilitates
customer behaviors such as providing public services or dona-
tions (e.g., Liang, Chen, and Lei 2016).
Broadcaster emotion increases audience size. The mere presence
of viewers may also be valuable to broadcasters and the plat-
form, as it helps generate traffic and can be leveraged for
sponsored advertisement displays. In addition, a nonpaying
viewer today may become a paying viewer tomorrow. Thus,
the effect of broadcaster emotion on audience size also war-
rants some discussion. The plots in Panel D of Figure 3 and the
results in Table 6 (the last column) suggest an overall weak and
only temporal effect of broadcaster emotion on audience size.
In particular, the shock on broadcaster emotion (i.e., .140)
427
increases the number of viewers by only .05 immediately and
approximately .164 in 2 minutes (the first row and last column
in the first panel in Table 6). Although this cumulative effect
increases to .538 in 10 minutes, it becomes nonsignificant by
minute 20, suggesting that broadcaster emotion increases the
number of viewers only temporarily and marginally (as
opposed to five viewers on average per minute across all the
streams). These results, together with the results for the effects
of broadcaster emotion on viewer tips, also suggest that the
mechanism for broadcaster emotion to increase viewer tips is
likely by increasing the tips by each individual viewer rather
than increasing the audience size. Subsequently, we conduct
additional tests where viewer engagement activities are mea-
sured per capita, to confirm this conjecture and demonstrate the
robustness of our main results.
Brief discussion of other effects. Table 6 also displays other effects
that are present in the context of live streaming. Detailed results
428 Journal of Marketing Research 58(3)

Table 6. Immediate and Relatively Longer-Lasting Effects.

Response/Impulse BCEmotion ViewerEmotion AmountTips NumLikes LenCmt NumViewers

Up to 2 Minutes

BCEmotion .191** .026** .189** .002** .001** .164**

(.002) (.003) (.033) (2.62e4) (1.54e4) (.032)
ViewerEmotion .023** .395** .085** .001** .003** .255**
(.001) (.003) (.031) (2.29e4) (1.43e4) (.025)
AmountTips .009** .007** 3.482** –1.68e4 5.78e5 .204**
(.001) (.002) (.114) (1.62e4) (9.16e5) (.028)
NumLikes .008** .018** .010 .030** 4.90e4** .321**
(.001) (.002) (.027) (4.97e4) (1.03e4) (.021)
LenCmt .020** .090** .045 .001** .019** .553**
(.001) (.004) (.031) (2.25e4) (.001) (.039)
NumViewers .030** .052** .241** .006** .004** 3.500**
(.002) (.006) (.063) (.001) (3.20e4) (.081)

Up to 5 Minutes

BCEmotion .272** .040** .268** .003** .002** .323**

(.005) (.007) (.066) (.001) (4.08e4) (.110)
ViewerEmotion .048** .416** .134** .003** .005** .503**
(.003) (.005) (.051) (4.90e4) (3.20e4) (.075)
AmountTips .016** .011** 3.528** 2.17e4 3.43e4* .406**
(.002) (.003) (.135) (2.68e4) (1.60e4) (.065)
NumLikes .018** .030** .048 .036** .001** .608**
(.002) (.004) (.047) (.001) (2.19e4) (.062)
LenCmt .050** .129** .126* .003** .024** 1.130**
(.004) (.010) (.063) (.001) (.002) (.122)
NumViewers .092** .105** .443** .013** .008** 5.863**
(.008) (.015) (.157) (.002) (.001) (.315)

Up to 10 Minutes

BCEmotion .328** .053** .331** .005** .002** .538*

(.010) (.011) (.095) (.001) (.001) (.261)
ViewerEmotion .073** .428** .177** .004** .005** .807**
(.005) (.008) (.069) (.001) (.001) (.173)
AmountTips .027** .017** 3.551** .001** .001** .633**
(.003) (.004) (.141) (4.22e4) (2.56e4) (.121)
NumLikes .033** .040** .085 .038** .002** .949**
(.004) (.006) (.062) (.001) (3.78e4) (.139)
LenCmt .091** .157** .215* .006** .026** 1.853**
(.010) (.016) (.100) (.001) (.002) (.295)
NumViewers .197** .174** .704** .023** .013** 8.519**
(.022) (.030) (.283) (.004) (.002) (.861)

Up to 20 Minutes

BCEmotion .357** .062** .371** .006** .003* .779

(.018) (.015) (.119) (.002) (.001) (.503)
ViewerEmotion .093** .438** .215** .005** .006** 1.122**
(.011) (.011) (.089) (.001) (.001) (.350)
AmountTips .038** .023** 3.576** .002** .001** .858**
(.006) (.006) (.148) (.001) (4.18e4) (.217)
NumLikes .051** .050** .123 .039** .003** 1.292**
(.009) (.009) (.080) (.002) (.001) (.286)
LenCmt .133** .179** .300* .009** .028** 2.598**
(.021) (.023) (.144) (.002) (.003) (.626)
NumViewers .329** .248** .988* .033** .018** 11.150**
(.058) (.055) (.443) (.007) (.005) (1.985)

*p < .05.
**p < .01.
Notes: NumLikes and LenCmt are measured in thousands. Standard deviations from Monte Carlo simulations are in parentheses.
Lin et al.
at each minute level can be visualized in corresponding IRFs
and are not reported herein. In brief, we find the following: (1)
Broadcaster emotion helps to boost the number of viewer likes.
(2) In addition to broadcaster emotion, viewer emotion exerts
some influence on all viewer engagement activities as well as
audience size. In fact, because broadcaster emotion does not
directly affect audience size (the first and second rows in the
last column in Table 6), it ultimately could boost the audience
size because of the mediation effects via viewer emotion and
other variables. (3) Viewer engagement activities and audience
size show strong and relatively longer-lasting effects on each
other. In particular, audience size has a strong influence on all
viewer activities and broadcaster emotion.
Determinants of Emotion and Engagement
We have thus far discussed each response of one endogenous
variable to the shock on another separately. To understand the
relative impact of different variables on a focal variable in the
PVAR model, generalized forecast error variance decomposi-
tion (GFEVD) can be employed. For each particular l-period
ahead, the forecast error variance in the focal variable j is
calibrated as the summation of the variance engendered by
each error or impulse in the system (for orthogonalized
impulses, see Lütkepohl [2005, Equation 2.3.35, p., 63]) or the
summation of not only the variances but also the covariances
(for generalized impulses, see Pesaran and Shin [1998, the
formulas above Section 3 on p. 20]). If, for each particular
period t, we take into account the forecast error variances for
any period from period 0 to the current period, then the total
forecast error variances of variable j can also be calculated by
first summing up the variances induced by each impulse from
period 0 to t and then summing up these variances across all the
impulses. In this way, we are able to quantify the relative and
dynamic impact of the impulses pertaining to all the endogen-
ous variables on a particular focal variable. As noted in prior
studies (Nijs, Srinivasan, and Pauwels 2007; Pesaran and Shin
1998), we can use either IRF or GIRF for the decomposition
tasks, depending on whether a specific causal ordering can be
established. We use GIRF to compute GFEVD for our main
interest in understanding the drivers of the key variables on
both the broadcaster side and the viewer side and because of
the lack of an obvious causal ordering.
Prior studies commonly determine a specific time period for
computing GFEVD by when the VAR system is stabilized
(e.g., 26 weeks in Nijs, Srinivasan, and Pauwels [2007]). In
the context of live streaming, we have no prior knowledge of
how many time periods are needed to fully capture the dynamic
effects. Thus, in accordance with the number of periods used to
compute GIRF, we also compute GFEVD for up to 20 minutes.
Because the GIRFs of each variable to the shock of itself are
often larger than the GIRFs to shocks of other variables (in
particular, the former are mostly one order of magnitude higher
than the latter when t ¼ 0, as reported in Table WF1 in Web
Appendix F), we exclude the GIRFs of each variable to the
shock of itself in the standard formulas so that we can visually
429
expose the relative impact of other variables on the focal vari-
able over time.16 Formally, the revised formula is as follows:
Xt
c ðlÞ 2
l¼0 ij
yij ðtÞ ¼ X 6 Xt ; i; j ¼ 1; 2; . . . ; 6; j 6¼ i;
k¼1; k6¼i
c ðlÞ 2
l¼0 ik
ð2Þ
where c i j ð lÞ is the GIRF of variable i to the one-standard-
deviation shock of variable j in time period l. y i j ð tÞ thus
captures the relative contribution of the shock of variable j to
the total variances in variable i across all the time periods from
0 to t, excluding what are induced by the shock of variable i
itself. Note that for any variable i, the sum of the relative
P
weights continues to be 1—that is, 6j¼1; j6¼ i y i j ð tÞ ¼ 1.
Figure 4 shows the GFEVDs over time for the four variables
reported in Figure 3 (i.e., BCEmotion, ViewerEmotion,
AmountTips, and NumViewers), which provides a glimpse of
not only which variables are the most significant determinants
of a focal variable (excluding itself) but also how the relative
importance evolves over time. Regarding broadcaster emotion
(the top-left plot), we can see that viewer emotion is a signif-
icant determinant that accounts for approximately 30% of the
forecast error variances that other variables contribute in the
first few minutes. Over time, this contribution decreases but
still accounts for over 10% by minute 20 (when 30.4% of the
variance in broadcaster emotion is explained by all the other
variables than broadcaster emotion itself). In addition, viewer
tips contribute to the variance in broadcaster emotion in the
first two minutes, but as time passes, they become a negligible
factor in boosting broadcaster emotion. Consistent with what
we discussed previously, the number of viewers has a large
impact on broadcaster emotion as well as on other variables
(other plots in Figure 4), and the relative impact tends to
strengthen over time. Examining the GFEVDs for viewer emo-
tion (the top-right plot), we find that broadcaster emotion mat-
ters, and its relative impact is almost constant across different
periods. In addition, the length of viewer chats significantly
contributes to variances in viewer emotion because viewer
emotion is deciphered from viewer chats; thus, the two natu-
rally could be highly correlated.
An important finding from the GFEVDs for viewer tips (the
bottom-left plot) is that audience size and broadcaster emotion
are the two most significant contributors. At t ¼ 0, each
accounts for approximately 50% of the variance. As time
16
Note that all the discussions in this section, without explicit notice, are about
the forecast error variances that are the net of those induced by the focal
variables themselves, and the percentages should be interpreted only within
the rest of the variables. We present in Web Appendix F the GFEVD plots
using the standard formula, where the GIRFs of each variable to the shock of
itself are also included. An alternative approach to compare the variables with
only small contributions to a focal variable is to simply plot these contributions
calculated from the standard formula against time (see, e.g., Pauwels et al.
2004), which is de facto equivalent to the approach used in the main text.
The plots generated by this alternative approach also appear in Web
Appendix F.
430
Figure 4. GFEVDs for key variables (excluding variances induced by focal variable).
Notes: GFEVD provides estimate of the proportion of the variance of a variable in the system with forecasts in t steps that can be explained by the generalized
shock in each variable. In these plots, the other variables (excluding the focal variable) together explain 30.4%, 6.6%, .9%, and 7%, respectively, of the variance of the
focal variable with forecasts in 20 minutes.
passes, the impact of the number of viewers rises, while that of
broadcaster emotion diminishes. Nevertheless, broadcaster
emotion continues to drive more than 20% of the variance in
viewer tips for a time window of 20 minutes. This result high-
lights the importance of broadcaster emotion management in
live streaming as well as its feasibility and potential in this
particular business context. The GFEVDs for audience size (the
bottom-right plot) suggest that the contributions of other vari-
ables are relatively stable over time, with viewer chats being
the most important contributor, followed by other viewer activ-
ities. The influence of broadcaster emotion is marginal and
accounts for less than 10% of the variance in audience size
across all time periods.
Dynamic Effects Within Streams
Our results show that broadcaster emotion in live streaming can
help generate more viewer tips and, to a lesser extent, boost
audience size after all other possible influences in the system
are controlled. This suggests that broadcaster emotion can be
Journal of Marketing Research 58(3)
an important marketing variable that broadcasters and plat-
forms could leverage in live streaming. A natural question that
immediately follows is when more emotion, or more smiles,
should be shown by the broadcaster in a live stream.17 Figure 2
shows that the spikes of viewer tips seem to happen during the
course of a stream (e.g., at about minute 20, 25, 45, and 95 for
the first stream; at about minute 35, 45, and 50 for the second
stream; at about minute 40 for the third stream), but not at the
beginning or near the end, even if broadcaster emotion in these
periods sometimes is heightened (e.g., near minute 120 in the
first stream). This implies that the relationship between emo-
tion and tips might be stronger during some period in the
streaming session. To shed light on the dynamic effect of
broadcaster emotion on viewer tips, as well as other effects
in our PVAR model, we conducted an exploratory moving
window analysis (Pauwels and Hanssens 2007). This algorithm
17
We thank an anonymous reviewer for raising the question and pointing us to
the analysis to address the question.
Lin et al.
Figure 5. Dynamic effects within streams from moving window analysis.
uses a fixed time window to conduct the PVAR analysis and
starts with the first time period. By rolling the time window to
later time periods, with older data points being dropped and
new data points being added to the analysis, the algorithm can
potentially capture the “time path” (Pauwels and Hanssens
2007, p. 309) of the estimated effects.
To conduct a moving window analysis, the size of the time
window needs to be predetermined. With no prior knowledge
of the length of data needed to identify the effects in PVAR
models or criteria for optimal selection of the length of data, we
resorted to using multiple window sizes and checked whether
the results were consistent. While a wider time window is more
capable of identifying the effects because there are more data
points, it also precludes the possibility of shedding light on the
dynamics of the effects approaching the end of a live stream.
For example, for a live stream lasting 120 minutes and a mov-
ing window size of 20 minutes, the last analysis that can be
conducted is at minute 100, using data from this minute to the
end. We ended up with several window sizes in the current
exploratory analysis, including 20, 30, and 40 minutes.18 The
results are consistent across the different choices of window
sizes and vary across different effects in the PVAR model. In
Figure 5, we plot the estimated coefficients for two effects, that
of broadcaster emotion on viewer tips (the first plot) and that of
viewer tips on broadcaster emotion (the second), using a win-
dow size of 30 minutes. For both plots, the x-axis represents the
starting minute of the time window, and the y-axis represents
the estimated coefficient (and the 95% confidence intervals).
As the plots show, both coefficients are statistically indifferent
18
All the variables for all the time windows pass the panel unit-root tests, and
the results are available upon request. However, these results do not preclude
the possibility that a unit root may exist in a particular variable in a particular
stream and with a particular time window. The results of the moving window
analysis thus need to be further ascertained by conducting extensive unit-root
tests on all the variables in all the stream for all the time windows separately.
We acknowledge the absence of this test as a potential caveat of the current
approach.
431
from 0 at the beginning of a live stream, and neither is signif-
icantly different from 0 approaching the end of the stream. The
relatively larger confidence intervals during the last few min-
utes are caused by reduced sample sizes. The only time period
when we observe a significantly positive coefficient estimate
for the former (i.e., the effect of broadcaster emotion on viewer
tips) is from minutes 40–60, roughly in the middle of a typical
live stream. Coincidently, the estimated coefficient of the latter
(i.e., the effect of viewer tips on broadcaster emotion) is
significantly positive during the period roughly from minute
40 to minute 70.
Heterogeneous Effects Across Streams/Broadcasters
Figure 2 also suggests that there is substantive heterogeneity
among different live streams or broadcasters hosting the
streams. In particular, although the extent of happiness of the
broadcaster in the first stream is less than that of the broad-
caster in the third, the first-stream broadcaster is able to gen-
erate more tips than the broadcaster in the third because we
observe more tip spikes in the first stream, which is also
slightly longer than the third stream. This heterogeneity may
be caused by broadcaster characteristics or the presence of
different viewers. Next, we provide some evidence that broad-
caster characteristics can explain the observed heterogeneity in
different streams to some extent.19
The platform helped us collect some variables of the broad-
caster before each live stream, including the number of streams
they had hosted (termed Experience), the total number of tips
received across all previous streams (termed Fame), and the
number of followers on the platform (termed Popularity). All
three characteristics reflect broadcasters’ different levels of
maturity or seniority within the platform. We first median split
the broadcasters according to each of the three variables to
19
We thank an anonymous reviewer for raising the question and asking us to
investigate further.
432 Journal of Marketing Research 58(3)

Table 7. Results from Split Sample Analyses.

Dependent Variable: AmountTipsi,t

BCEmotioni;t1 .0849 .5787* .1641 .5189* .0333 .6207*

(.1556) (.2280) (.1183) (.2387) (.0874) (.2653)
BCEmotioni;t2 .0472 .2457 .1264 .1453 .1767* .0925
(.1237) (.1794) (.0961) (.1878) (.0894) (.2042)
ViewerEmotioni;t1 .0081 .1258 .0390 .0758 .0546 .0637
(.0412) (.0731) (.0307) (.0675) (.0313) (.0716)
ViewerEmotioni;t2 .0072 .1146 .0387 .0588 .0706 .0337
(.0364) (.0703) (.0335) (.0640) (.0506) (.0608)
AmountTipsi;t1 .1563** .0733* .1407** .0945** .0789* .1028**
(.0294) (.0317) (.0419) (.0306) (.0361) (.0339)
AmountTipsi;t2 .0236 .0298 .0575* .0265 .0328 .0285
(.0278) (.0260) (.0276) (.0213) (.0218) (.0237)
NumLikesi;t1 .9746 .7804 .0665 .0311 .2114 .1318
(.8472) (1.0944) (.4244) (1.1924) (.3831) (1.2418)
NumLikesi;t2 .4316 .7174 .3210 .8023 .3496 .8019
(.9353) (1.2913) (.6925) (1.3473) (.6637) (1.3928)
LenCmti;t1 .7658 .7274 .8161 1.7393 .7490 1.4877
(1.4706) (2.8608) (1.1568) (2.5053) (1.4784) (2.1967)
LenCmti;t2 .6890 2.5373 .6519 1.9624 .9528 1.6456
(.9981) (2.7519) (.8174) (2.2245) (.9343) (1.9890)
NumViewersi;t1 .0467 .0390 .0576* .0350 .0672* .0296
(.0261) (.0286) (.0292) (.0252) (.0297) (.0261)
NumViewersi;t2 .0022 .0119 .0154 .0031 .0006 .0048
(.0149) (.0232) (.0188) (.0187) (.0182) (.0197)

Categorization variable Experience Fame Popularity

Less More Less More Less More

Stream fixed effects Yes Yes Yes Yes Yes Yes

N(obs) 53,774 50,666 47,508 56,932 48,015 56,425

*p < .05.
**p < .01.
Notes: Experience is measured by the number of streams a broadcaster has hosted, fame is measured by the total number of tips received the broadcaster has
received, and popularity is measured by the number of followers the broadcaster has on the platform. Robust standard errors clustered by streams are in
parentheses. Only coefficient estimates for AmountTips are reported.

generate three dummy variables (1 ¼ yes, 0 ¼ no). We then
reran the PVAR model on the split live streams (Table 7).20
Finally, we created interaction terms of broadcaster emotion
and each of the three dummy variables and reestimated the
PVAR models with each of these interaction terms (Table 8).
Because these dummy variables were defined with broadcaster
characteristics, we refrained from also interacting them with
variables pertaining to the audience. The results in Table 7
show that broadcaster emotion could directly and immediately
influence viewer tips in a live stream only when the broadcaster
is more senior, operationalized in three different ways (i.e.,
columns 2, 4, and 6). These results are corroborated in Table 8.
Across all the model specifications, the interaction terms of the
dummy variables and broadcaster emotion (with a one-minute
20
All the variables in all the split samples pass the panel unit-root tests. The
results in this section also hold if only the 681 streams are used, where all the
variables in all the streams pass the individual unit-root tests. These results are
available upon request.
lag) directly and immediately influence viewer tips. These
results together provide converging evidence that only savvy
broadcasters can leverage their emotion to generate more
viewer tips in their live streams.
Robustness Checks
In this section, we employ three sets of robustness checks to
validate and corroborate our main analysis. We address the
following issues that may threaten the results of our main anal-
ysis: (1) measurement of broadcaster emotion; (2) additional
data issues related to skewness and extreme observations,
excess zeros in viewer tips, and stationarity of variables; and
(3) (mis)specification of the model, including alternative sets
of dependent variables, different numbers of time lags, and
restricted versions of the main model in which broadcasters are
assumed to be unable to respond to viewer chats and viewer
emotion immediately. The results from 15 robustness tests lend
additional support to the main conclusion of our study. All the
results appear in Web Appendix G.
Lin et al. 433

Table 8. Results from Moderation Analyses.

Dependent Variable: AmountTipsi,t

BCEmotioni;t1 .0961 .1461 .1116 .1306 .0193 .0067
(.1485) (.1428) (.0985) (.1032) (.0869) (.0828)
BCEmotioni;t2 .1345 .0330 .1357 .0973 .1438 .1686y
(.1079) (.1159) (.1085) (.0857) (.1099) (.0868)
BCEmotioni;t1  Morei .5073* .4080y .4547y .4186y .6310* .6541**
(.2377) (.2179) (.2359) (.2138) (.2576) (.2247)
BCEmotioni;t2  Morei .2038 .0738 .0470
(.1731) (.1725) (.1806)

Categorization variable Experience Fame Popularity

defining Morei

Stream Fixed Effects Yes

N(obs) 104,440
y
p < .1.
*p < .05.
**p < .01.
Notes: Morei is defined following a median split of each variable and takes 1 for streams with a relatively larger value and 0 otherwise. Robust standard errors
clustered by streams are in parentheses. Only coefficient estimates of the interaction terms for AmountTips are reported.

Measurement of Emotion
This study concerns the interdependencies and influences
among broadcaster emotion, viewer emotion, viewer engage-
ment activities and participation in live streams. Here, the two
variables pertaining to emotion are obtained from unstructured
data (i.e., videos and texts) using machine learning algorithms.
Thus, having an accurate and consistent measure of the two
variables is of ultimate importance. In our main analysis,
broadcaster emotion is calibrated by facial expressions, but
viewer emotion is constructed on the basis of live comments
aggregated across all viewers. It is likely that our results may be
susceptible to inconsistency in constructing the two variables,
to the transient nature of the broadcaster showing a happy face,
and even to the reliability of the machine learning algorithm
used to extract emotion from facial expressions.
Correspondingly, we conducted four different robustness
tests and found the results of all the tests to support the main
findings. First, we leveraged the vocal information embedded
in the recordings (i.e., what was said by the broadcasters) to
extract broadcaster emotion. The process involved two steps:
transcribing the video clips to obtain the scripts (note that only
the broadcaster speaks in a live stream) and then using the same
approach for constructing viewer emotion (i.e., segmenting
words, then applying LIWC) to construct broadcaster emotion
(Table WG1.1).21 Second, rather than structuring all the data at
the minute level, we recalculated everything at the half-minute
level so that not only emotion but also viewer activities were
calibrated every 30 seconds rather than every minute (Table
WG1.2). Third, we included both happiness and sadness in the
21
We performed the transcription task using the speech recognition service of
Baidu, the top search engine in China. The company is also a leading firm in
speech recognition, in particular for the Chinese language. The paid service is
available at https://ai.baidu.com/tech/speech/asr.
PVAR model and examined the effects of these two types of
valence rather than a single type (Table WG1.3). Fourth,
because emotion comprises both valence and arousal, we con-
solidated happiness and surprise, which represent valence and
arousal, respectively, into a single variable of emotion (Table
WG1.4). In relation to these analyses, we also conducted a
placebo test that employed neutrality as the only emotion in
the model (Table WG1.5) and found that when broadcaster
emotion is neutral, its influence on viewer tips is statistically
indifferent from 0.
Other Potential Data Issues
In addition to the data issues pertaining to the measurement of
emotion, our results may also suffer from other potential issues.
We conducted four additional tests to demonstrate the robustness
of our main results. First, as Table 1 suggests, some variables in
our data are highly skewed, which could bias the estimates. We
followed the common practice to take the logarithm of each
variable (plus one to avoid creating nonsense data) and used the
new variables in the PVAR model (Table WG2.1). Second, the
top 5% of live streams in terms of the total viewer tips received
by the broadcasters (Figure WB2 in Web Appendix B) attract a
disproportionately larger amount of viewer tips. To ensure that
the results were not primarily driven by these few streams, we
removed them and reestimated the model on the basis of the
remaining data (Table WG2.2). Third, as Figure 2 suggests, the
occurrence of viewer tipping appears to be much less frequent
(approximately 6% of the minutes) than other key variables,
which may lead to our main results suffering from excess zeros.
To alleviate this concern, we ranked the streams by the fre-
quency of occurrence of tips and retained the first quarter of
streams where tips occurred most frequently. In these streams,
viewer tips on average occurred in approximately 17% of the
minutes, and the issue of excess zeros was less of a concern
434
(Table WG2.3). Lastly, in conducting panel unit-root tests, we
followed common practice in PVAR models by stating our null
hypotheses, as all panels contain a unit root. This is quite a loose
criterion because the nonexistence of a unit root of the data for
any single live stream would allow the whole panel data to pass
the unit-root test. We thus unpacked the unit-root test for the
panel data and conducted the test for each variable in each
stream. The number of streams that passed the unit-root test for
all the variables is 681 (or 47% of all 1,450 streams). Details
appear in Web Appendix E. The results of estimating the model
on data from only these 681 streams are qualitatively unchanged
(Table WG2.4).
Model (Mis)specification
Finally, our model may suffer from potential misspecification
issues. Our final set of tests show that model misspecification is
less a concern in our study. One such concern is whether the
number of viewers should be treated as endogenous. While
viewers in a live stream observe what happens inside, viewers
outside the stream may decide to join for a host of reasons.
Some may be related to the fame of the broadcaster, while
others may be irrelevant. It is thus worthwhile to evaluate
whether the key results from our main analysis hold without
the number of viewers as an endogenous variable. We ran such
a model specification, with the number of viewers included
only as an exogenous control variable (Table WG3.1). A
related matter is that the aggregated viewer activities are obvi-
ously affected by the audience size. It was thus of interest to
operationalize the viewer activity variables as per capita rather
than aggregated to help shed light on the behaviors of a repre-
sentative viewer. Performing such an analysis also enabled us
to identify and potentially differentiate two mechanisms for
broadcaster emotion to have a positive effect on viewer tips:
by increasing the tips at the individual viewer level, by increas-
ing the audience size, or both. We thus transformed the three
engagement activities (AmountTips, NumLikes, LenCmt) to a
per capita basis and reestimated the model with the new vari-
ables (Table WG3.2). Another concern relates to the choice of
the number of time lags for the PVAR model. As determined by
different MMSC values, our main analysis estimated the model
with two lags. It is, however, also true that MMSC BIC favors a
model with only one lag, and models with two and three lags,
based on both MMSC HQIC and MMSC AIC , are not very dif-
ferent. We thus estimated alternative models with only one lag
and with three lags (Table WG3.3). Finally, processing the
information from viewers, in particular, viewer chats and relat-
edly viewer emotion embedded in the chats, may take time.
Correspondingly, broadcasters in live streams may not be able
to process the information timely. We thus estimated restricted
PVAR models where immediate effects of viewer chats and
viewer emotion on broadcaster emotion were arbitrarily set
to 0, which effectively assumed that broadcasters do not
respond to these variables in the immediately following period
(Table WG3.4–3.6).
Journal of Marketing Research 58(3)
Discussion and Conclusion
Summary of Empirical Findings
In this research, we estimate a PVAR model using a data set of
1,450 live sessions from a popular live streaming platform in
China to understand the dynamic and interdependent broad-
caster and viewer behaviors in this novel business context. In
the main model, we study the potential emotional contagion
between broadcasters and viewers. We also investigate the
impact of emotion of both parties on viewers’ engagement
activities, including the amount of tips they collectively send,
the length of comments, and the number of likes they generate
together. Because we measure collective viewer behaviors, the
number of viewers is relevant, and we include it in the model.
In addition to the main analysis, we conduct multiple robust-
ness tests to corroborate the findings.
We uncover several interesting results pertaining to the driv-
ers of emotion and the impact of emotion in data-rich environ-
ments such as live streaming (Wedel and Kannan 2016). First,
we find that the emotions of broadcasters and viewers influence
each other. However, the broadcaster’s emotional response to
viewer emotion, compared with viewers’ response to broad-
caster emotion, is relatively larger in terms of both immediate
effects and relatively longer-lasting effects. Second, broadcas-
ter emotion helps attract viewer tips (a measure of viewer
behavior) and stimulate viewer liking and chatting (measures
related to viewer attitude). Our research thus contributes to the
literature by examining the effect of emotion on both attitude
and behavior, in contrast to prior research that examined the
effects of emotion on the two constructs in isolation. The find-
ings indicate that broadcaster emotion also helps increase the
audience size. Third, the PVAR model enables us to measure
and quantify the effects of one variable on another in the sys-
tem in both a relatively shorter time period (e.g., two or five
time periods; each unit is a minute in our context) and a rela-
tively longer time period (e.g., 10 or 20 minutes). In live
streaming, for example, we find that the cumulative effect of
broadcaster emotion on viewer tips is statistically positive and
substantive even in 20 minutes. These relatively longer-lasting
effects, pertaining to emotion in particular, have so far been
absent in the literature. Fourth, our results also highlight the
dynamics of these effects across time in a live stream. Specif-
ically, we find that the effects are pronounced during the course
of a live stream but not at the beginning or near the end. Finally,
our results suggest that only broadcasters who have more expe-
rience, receive more tips, or are more popular in past live
streams can leverage their emotion to attract more viewer tips.
Managerial Implications
Our results shed light on the behaviors of the main players in
live streaming (i.e., broadcasters and viewers) and have strong
implications for live streaming platforms and broadcasters who
are direct beneficiaries of the business. The results also inform
viewers of the best strategy for engaging in a live stream as well
as potential pitfalls.
Lin et al.
Our study can be leveraged by live streaming platforms and
broadcasters to quantify the financial returns on marketing
interventions (e.g., emotion enhancement). Prior research on
PWYW, while illuminating, has focused largely on the motiva-
tional factors (e.g., Feldhaus, Sobotta, and Werner 2018; Kim,
Natter, and Spann 2009; Regner 2015) for tipping behaviors in
static and isolated settings and cannot be readily applied to the
dynamic and interactive live streaming setting. Our results
enable simple back-of-the-envelope calculations of the number
of additional tips to expect in a live stream, conditional on
change in any variable in the ambience. For example, the first
plot in Panel C of Figure 3 suggests that if a broadcaster’s
happiness is increased by one standard deviation (i.e., .140 in
Table 1), they will immediately be able to attract .1 CNY,
representing a 60% increase in what they receive (i.e., .167
in Table 1). The cumulative effects reported in the second plot
in Panel C of Figure 3 and in Table 6 suggest that this number
increases as time passes (e.g., to .189 CNY in 2 minutes and to
.331 CNY in 10 minutes).
Our finding that broadcaster emotion helps attract viewer
tips also provides suggestions for solving the so-called cold
start problem (Wang et al. 2018), which manifests in the con-
text of live streaming as the difficulty that broadcasters face in
generating the first virtual gift. Obviously, rather than relying
on the random arrival of virtual gifts to kick off the vicarious
process, a broadcaster can seed the process with a smile and
allow their own efforts to pay off with time. In addition, our
results show that such a strategy may not be as effective during
the first few minutes and should be used after a live stream has
been active for a while. Another related result is that all the
viewer-side variables, except the number of viewers, are less
effective than broadcaster emotion in driving up tips (the
bottom-left plot in Figure 4). Live streaming platforms some-
times need to rationalize their allocation decisions for an often
limited budget, on the broadcaster side, the viewer side, or both
sides, to achieve the best return on investment. This finding
suggests that if maximizing viewer tips is the primary goal,
platforms may be better off if they train their broadcasters to
smile more in live streams rather than incentivizing viewers to
tip in order to foster a sustainable and prosperous business.
Our study can be used by viewers to guide their behaviors on
live streaming platforms as well. First, our results suggest that
viewers’ presence matters in live streams. The audience size is
a strong driver of positive broadcaster emotion. In addition,
viewer engagement activities, such as chats and tips, greatly
improve broadcaster emotion (the top-left plot in Figure 4).
Second, despite tips being a useful device to reward a broad-
caster in live streaming, who subsequently may deliver better
content, viewers should be reminded that the effect of their tips
on improving broadcaster emotion seems to come into play
only during the course of a live stream rather than at the begin-
ning or near the end (i.e., from minute 40 to minute 70, as
suggested by the second plot in Figure 5). This finding provides
useful information about the timing under which viewers may
want to tip to maximize the utility they derive from engage-
ment in the live stream. It also helps viewers rationalize their
435
spending and better plan the replenishment of the virtual gifts
in their accounts.
Limitations and Future Research
Our research joins other studies to advance research on PWYW
to online settings. It is important to systematically examine and
understand business contexts under PWYW pricing where cus-
tomer tipping, chatting and liking, and the emotions of both
customers and providers of products and/or services influence
each other and coevolve in an integrated manner. Our research
takes a step in this direction estimating a PVAR model on data
from live streaming. The new explorations expose our study to
a few constraints and limitations that we call for future research
to address.
First, our results are based on data from a single live stream-
ing platform in China, which primarily hosts talk shows and
casual chats. As live streaming continues to embrace games
and e-commerce, it is an empirical question whether our results
are replicable in other live streaming platforms.22 For live
stream platforms that cater primarily to game fans, we expect
our main results to hold. Viewers in game-playing live streams
are likely to be even more involved, which allows them to
discern the broadcaster’s emotion and easily synchronize with
the broadcaster. For live streaming channels operating on
e-commerce platforms and used as an alternative channel to
demonstrate products, our main results may not apply. Some
viewers on these platforms may be more interested in the prod-
ucts being demonstrated than in the broadcaster in a live
stream. Thus, it may be less likely that these viewers will tip
the broadcaster for product demonstration alone. In terms of
cultural differences, our results, based on data from a live
streaming platform in a collectivist society, may not apply
directly to societies with a different cultural orientation.
Second, we use established machine learning algorithms to
conduct text analysis to calibrate the sentiment in chats for both
viewers and broadcasters and use video analysis to extract the
emotion of broadcasters based on their facial expressions.
These algorithms have proven reliable for these tasks. Never-
theless, the richness of live stream videos may not necessarily
be captured by the facial expressions of broadcasters alone, and
sentiment derived from chats may not necessarily align with
the true emotion of broadcasters and viewers. As machine
learning algorithms become more versatile, we expect that
future research could expand the metrics from emotion
embedded in facial expressions and sentiment based on text
to much more comprehensive sets of variables that machines
can readily and automatically collect.
Third, our examination of viewer behavior is at the aggre-
gate level, which is determined by the data made available to
the current study and the choice of model (i.e., PVAR). Thus,
22
For example, a recent report by iResearch, a large marketing research and
consulting firm, provides a glimpse of the success of live streaming in
combination with ecommerce. The preview of the report is accessible at
http://www.iresearchchina.com/content/details8_55544.html.
436
all of our results should be interpreted as aggregated viewer
behaviors or the behavior of an average viewer in live stream-
ing. Relatedly, while our results show that broadcaster emotion
is a key driver of viewer tips at the aggregate level, due to the
lack of individual viewer–level metrics, we could not verify
whether broadcaster emotion indeed influences the tipping
decisions of each individual viewer—and, if so, how. Future
research could delve into the questions explored in our study
with fine-grained individual-level data and investigate viewers’
heterogeneous behaviors and decision-making processes to
better understand the drivers in this or other similar contexts.
In this case, PVAR models may not continue to work due to
issues such as relatively shorter panels and thus the existence of
unit roots in the data. Correspondingly, new methodologies
may have to be invented to address the complex interactions
between individual viewers and broadcasters, including the
same viewer visiting different streams and/or different viewers
visiting the same stream at the same time.
Acknowledgments
The authors thank a large live streaming platform in China for help
with the collection of the data and extensive discussions about the
industry. They are also thankful to the JMR review team for the con-
structive and developmental review process. The authors also thank
the participants at the 2019 Conference on Artificial Intelligence,
Machine Learning, and Business Analytics at Temple University; the
18th Pre-ICIS Workshop on e-Business; the 2020 Marketing Science
Conference; Peking University; Tsinghua University; Shanghai Jiao-
tong University; City University of Hong Kong; and Hong Kong
Polytechnic University for their valuable feedback.
Author Contributions
Yan Lin and Dai Yao contributed equally and are listed in alphabetical
order.
Associate Editor
Randolph Bucklin
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to
the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for
the research, authorship, and/or publication of this article: This
research is supported by the Start-up Research Grant of Shenzhen
University (00001109), the NUS Research Grant (R-316-000-104-
133), the Natural Science Foundation of Guangdong Province, China
(2019WQNCX106), and the National Natural Science Foundation of
China (71872115).
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