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

Guy Aridor, Duarte Gonçalves, Daniel Kluver, Ruoyan Kong and Joseph Konstan

No 10129, CESifo Working Paper Series from CESifo

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.

Keywords: recommender systems; information acquisition; field experiment (search for similar items in EconPapers)
JEL-codes: D12 D47 D83 L15 M37 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-exp, nep-mkt and nep-pay
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