AlyssaS - 1:55 pm on Aug 16, 2011 (gmt 0)
So it would seem that there is no clear agreement on this! Matt Cutts comment to me implies that Google recognises an affiliate link and will treat it as such anyway (whether or not it is a well known affiliate) so what is the point of nofollowing the links, other than to perhaps show Google that you as the webmaster is being honest to them that it is an affiliate link?
Remember that the sole purpose of "nofollow" is to prevent PageRank being passed to the external site. There is no other reason for no-follow (no-follow isn't a cloak, it's simply an instruction to G not to pass pagerank).
Why would you want to pass Page Rank to the merchant you are an affiliate of. Do you have some wish to help them outrank you on the SERPs?
How do you think Amazon has become so dominant in the SERPs while similar retail giants like Walmart lag behind?
Simple - Amazon has been very aggressive about using affiliates since the beginning - and the links they provide in their toolbox are do-follow, and most of their affiliates arn't shrewd enough to add no-follow to them. Walmart and others haven't really used affiliates to the same extent and as a result don't have as many do-follow links coming into their site the way Amazon does. As a result they don't outrank most of their affiliates the way Amazon does either!