Abstract
Recommender systems are an integral part of the online retail environment. Prior research has focused largely on computational approaches to improving recommendation accuracy, and only recently researchers have started to study their behavioral implications and potential side effects.We used three controlled experiments, in the context of purchasing digital songs, to explore the willingness-to-pay judgments of individual consumers after being shown personalized recommendations. In Study 1, we found strong evidence that randomly assigned song recommendations affected participants' willingness to pay, even when controlling for participants' preferences and demographics. In Study 2, participants viewed actual system-generated recommendations that were intentionally perturbed (introducing recommendation error), andwe observed similar effects. In Study 3,we showed that the influence of personalized recommendations on willingness-to-pay judgments was obtained even when preference uncertainty was reduced through immediate and mandatory song sampling prior to pricing. The results demonstrate the existence of important economic side effects of personalized recommender systems and inform our understanding of how system recommendations can influence our everyday preference judgments. The findings have significant implications for the design and application of recommender systems aswell as for online retail practices.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 84-102 |
| Number of pages | 19 |
| Journal | Information Systems Research |
| Volume | 29 |
| Issue number | 1 |
| DOIs | |
| State | Published - Mar 1 2018 |
| Externally published | Yes |
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Keywords
- Behavioral economics
- Electronic commerce
- Laboratory experiments
- Preferences
- Recommender systems
- Willingness to pay
ASJC Scopus subject areas
- Information Systems
- Computer Networks and Communications
- Information Systems and Management
- Library and Information Sciences
Cite this
Effects of online recommendations on consumers' willingness to pay. / Adomavicius, Gediminas; Bockstedt, Jesse C; Curley, Shawn P.; Zhang, Jingjing.
In: Information Systems Research, Vol. 29, No. 1, 01.03.2018, p. 84-102.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Effects of online recommendations on consumers' willingness to pay
AU - Adomavicius, Gediminas
AU - Bockstedt, Jesse C
AU - Curley, Shawn P.
AU - Zhang, Jingjing
PY - 2018/3/1
Y1 - 2018/3/1
N2 - Recommender systems are an integral part of the online retail environment. Prior research has focused largely on computational approaches to improving recommendation accuracy, and only recently researchers have started to study their behavioral implications and potential side effects.We used three controlled experiments, in the context of purchasing digital songs, to explore the willingness-to-pay judgments of individual consumers after being shown personalized recommendations. In Study 1, we found strong evidence that randomly assigned song recommendations affected participants' willingness to pay, even when controlling for participants' preferences and demographics. In Study 2, participants viewed actual system-generated recommendations that were intentionally perturbed (introducing recommendation error), andwe observed similar effects. In Study 3,we showed that the influence of personalized recommendations on willingness-to-pay judgments was obtained even when preference uncertainty was reduced through immediate and mandatory song sampling prior to pricing. The results demonstrate the existence of important economic side effects of personalized recommender systems and inform our understanding of how system recommendations can influence our everyday preference judgments. The findings have significant implications for the design and application of recommender systems aswell as for online retail practices.
AB - Recommender systems are an integral part of the online retail environment. Prior research has focused largely on computational approaches to improving recommendation accuracy, and only recently researchers have started to study their behavioral implications and potential side effects.We used three controlled experiments, in the context of purchasing digital songs, to explore the willingness-to-pay judgments of individual consumers after being shown personalized recommendations. In Study 1, we found strong evidence that randomly assigned song recommendations affected participants' willingness to pay, even when controlling for participants' preferences and demographics. In Study 2, participants viewed actual system-generated recommendations that were intentionally perturbed (introducing recommendation error), andwe observed similar effects. In Study 3,we showed that the influence of personalized recommendations on willingness-to-pay judgments was obtained even when preference uncertainty was reduced through immediate and mandatory song sampling prior to pricing. The results demonstrate the existence of important economic side effects of personalized recommender systems and inform our understanding of how system recommendations can influence our everyday preference judgments. The findings have significant implications for the design and application of recommender systems aswell as for online retail practices.
KW - Behavioral economics
KW - Electronic commerce
KW - Laboratory experiments
KW - Preferences
KW - Recommender systems
KW - Willingness to pay
UR - http://www.scopus.com/inward/record.url?scp=85043999911&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85043999911&partnerID=8YFLogxK
U2 - 10.1287/isre.2017.0703
DO - 10.1287/isre.2017.0703
M3 - Article
AN - SCOPUS:85043999911
VL - 29
SP - 84
EP - 102
JO - Information Systems Research
JF - Information Systems Research
SN - 1047-7047
IS - 1
ER -