Blockbuster Culture's Next Rise or Fall: The Impact of RecommenderSystems on Sales Diversity
This paper examines the effect of recommender systems on the diversityof sales. Two anecdotal views exist about such effects. Some believerecommenders help consumers discover new products and thus increasesales diversity. Others believe recommenders only reinforce thepopularity of already popular products. This paper seeks to reconcilethese seemingly incompatible views. We explore the question in two ways.First, modeling recommender systems analytically allows us to exploretheir path dependent effects. Second, turning to simulation, we increasethe realism of our results by combining choice models with actualimplementations of recommender systems. Our main result is that somewell known recommenders can lead to a reduction in sales diversity.Because common recommenders (e.g., collaborative filters) recommendproducts based on sales and ratings, they cannot recommend products withlimited historical data, even if they would be rated favorably. In turn,these recommenders can create a rich-get-richer effect for popularproducts and vice-versa for unpopular ones. This bias toward popularitycan prevent what may otherwise be better consumer-product matches. Thatdiversity can decrease is surprising to consumers who express thatrecommendations have helped them discover new products. In line withthis, we show it is possible for individual-level diversity to increasebut aggregate diversity to decrease. Recommenders can push each personto new products, but they often push similar users toward the sameproducts. We show how basic design choices affect the outcome, and thusmanagers can choose recommender designs that are more consistent withtheir sales goals and consumers' preferences.
Year of publication: |
2007
|
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Authors: | Fleder, Daniel ; Hosanagar, Kartik |
Institutions: | The Wharton School, University of Pennsylvania ; The Wharton School, University of Pennsylvania |
Saved in:
freely available
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