Do recommender systems always benefit firms by reducing consumer search effort?

Abhijeet Ghoshal, Vijay Mookerjee, Sumit Sarkar

Research output: Contribution to conferencePaperpeer-review

Abstract

With the gain in popularity of the internet in the beginning of this decade, online shopping has witnessed a strong growth rate of about 25 percent per year. However, recent reports suggest that the growth rate is flattening. One of the key reasons for dwindling growth rate is the rise in expectations of the customers. Customers want that the retail websites should help them in finding products through recommendations. Therefore it is expected that firms would have higher profits by using recommender systems since that will boost their sales. However we show that increased profits are guaranteed only if a firm has the monopoly in the market. Market with two firms may not witness increased profits for both the firms. We analyze how the improvement in technology of recommender system affects the market, the price charged by the firms and therefore their profits.

Original languageEnglish (US)
StatePublished - Dec 1 2009
Externally publishedYes
Event30th International Conference on Information Systems, ICIS 2009 - Phoenix, AZ, United States
Duration: Dec 15 2009Dec 18 2009

Other

Other30th International Conference on Information Systems, ICIS 2009
Country/TerritoryUnited States
CityPhoenix, AZ
Period12/15/0912/18/09

Keywords

  • Analytical modeling
  • E-business
  • Economic modeling
  • Recommendation agent

ASJC Scopus subject areas

  • Information Systems

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