Gediminas Adomavicius
Carolyn I. Anderson Professor in Business Education Excellence and Professor of Information and Decision Sciences
Department of Information and Decision Sciences
Carlson School of Management, University of Minnesota
November 8, 2013
Speakman Hall 200, 10:00am – 11:30am
Seminar Title: Suggest or Sway? Effects of Online Recommendations on Consumers’Willingness to Pay
Abstract
Recommender systems have become an integral part of the online retail environment. Prior research has focused on advancing computational approaches to improving recommendation accuracy. Only recently have their behavioral implications become an object of study. In particular, the potential impact of recommender systems on economic behavior of individual consumers represents an important issue yet to be comprehensively explored. We present the results of two controlled experiments in the context of purchasing digital songs, which explore this issue. In the first study, we found strong evidence that randomly assigned song recommendations affected participants’ willingness to pay, even when controlling for participants’ preferences and demographics. In the second study, participants viewed actual system-generated recommendations that were intentionally perturbed (introducing recommendation error) and observed similar effects on willingness to pay. The results have significant implications for the design and application of recommender systems as well as for online retail practices.
For a copy of the paper, please email swattal@temple.edu