A theory of recommendations
This paper investigates the value of recommendations for disseminating economic information, with a focus on frictions resulting from preference heterogeneity. We consider Bayesian expected-payoff maximizers who receive non-strategic recommendations by other consumers. The paper provides conditions under which different consumer types accept these recommendations. Moreover, we assess the overall value of a recommendation system and the determinants of that value. Our analysis highlights the importance of disentangling objective information from subjective preferences when designing value-maximizing recommendation systems.
Year of publication: |
2024
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Authors: | Benkert, Jean-Michel ; Schmutzler, Armin |
Publisher: |
Zurich : University of Zurich, Department of Economics |
Subject: | recommendations | preference heterogeneity | optimal design |
Saved in:
freely available
Series: | Working Paper ; 448 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 10.5167/uzh-261876 [DOI] 190064861X [GVK] |
Classification: | D02 - Institutions: Design, Formation, and Operations ; d47 ; D83 - Search, Learning, Information and Knowledge |
Source: |
Persistent link: https://www.econbiz.de/10015054205