Biased Recommendations and Differentially Informed Consumers

Martin Peitz and Anton Sobolev ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We consider a monopolist selling an experience good to differentially informed consumers: some consumers are uncertain about their tastes, whereas other consumers are perfectly informed. The fully informed monopolist sets a uniform price and can make personalized product recommendations. We characterize conditions under which the monopolist biases its recommendations – that is, some consumers with match values lower than the marginal cost follow the recommendation to buy the product or some consumers with match values higher than the marginal cost follow the recommendation not to buy the product.

Keywords: information design; biased recommendations; recommender system (search for similar items in EconPapers)
JEL-codes: D21 D42 L12 L15 M37 (search for similar items in EconPapers)
Pages: 16
Date: 2024-05
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2024_554

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