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The Economics of Recommender Systems: Evidence from a Field Experiment on MovieLens

Author

Listed:
  • Guy Aridor
  • Duarte Gonçalves
  • Daniel Kluver
  • Ruoyan Kong
  • Joseph Konstan

Abstract

We conduct a field experiment on a movie-recommendation platform to identify if and how recommendations affect consumption. We use within-consumer randomization at the good level and elicit beliefs about unconsumed goods to disentangle exposure from informational effects. We find recommendations increase consumption beyond its role in exposing goods to consumers. We provide support for an informational mechanism: recommendations affect consumers’ beliefs, which in turn explain consumption. Recommendations reduce uncertainty about goods consumers are most uncertain about and induce information acquisition. Our results highlight the importance of recommender systems’ informational role when considering policies targeting these systems in online marketplaces.

Suggested Citation

  • Guy Aridor & Duarte Gonçalves & Daniel Kluver & Ruoyan Kong & Joseph Konstan, 2022. "The Economics of Recommender Systems: Evidence from a Field Experiment on MovieLens," CESifo Working Paper Series 10129, CESifo.
    • Handle: RePEc:ces:ceswps:_10129
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    Cited by:

    1. Guy Aridor & Rafael Jiménez-Durán & Ro'ee Levy & Lena Song, 2024. "The Economics of Social Media," CESifo Working Paper Series 10934, CESifo.

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    More about this item

    Keywords

    recommender systems; information acquisition; field experiment;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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