Effects of online recommendations on consumers' willingness to pay

摘要

Recommender systems through ratings, helps consumers find interesting items from a large set of possible items that they have not yet purchased, experienced or considered. But to what extent personalized recommender system ratings influence users' willingness to pay for items is the research question of the study. Based on behavioral theories in economics and psychology, it is hypothesized that online recommendations significantly pull a consumer's willingness to pay in the direction of the recommendation. This is tested using three controlled behavioral experiments in the context of digital music sales. The first study investigates whether randomly generated recommendations significantly impact consumers' willingness to pay for digital songs. The second study tests whether the effects still exist for perturbations of actual recommendations generated by a real-time system that employs a popular widely used recommendation algorithm. The third study investigates judgments made following mandatory consumption of song samples prior to indicating willingness to pay for songs. Results show that personalized recommendation systems clearly are prevalent decision aids in the online market-space, and the unintended influence of these recommendations on consumers' judgments have significant practical implications.