Template-Type: ReDIF-Paper 1.0
Title: Biased Recommendations and Differentially Informed Consumers
Author-Name: Martin Peitz
Author-Email: Martin.Peitz@gmail.com
Author-Name: Anton Sobolev
Author-Email: anton.sobolev@uni-mannheim.de

Classification-JEL: L12, L15, D21, D42, M37
Keywords: information design, biased recommendations, recommender system

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.

Note: 
Length: 16
Creation-Date: 2024-05
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp554
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2024_554