Monday Research Seminar Series 

February 11, Kartik Hosanger (University of Pennsylvania)

Noon, Hamburg Hall, Room 1502

Blockbuster Culture's Next Rise or Fall: The Impact of Recommender Systems on Sales Diversity

We examine the effect of recommender systems on the diversity of sales. We arrive at four main results. One, some common recommenders lead to a net reduction in average sales diversity. Because common recommenders recommend products based on sales and ratings, they cannot recommend products with limited historical data, even if they would be rated favorably. This finding is often surprising to consumers who express that recommendations have helped them discover new products. In line with this, result two shows that recommenders can push each person to new products, but they often push us toward the same new products. Result three finds that recommenders intensify the effects of chance events on market outcomes. At the product level, recommenders can 'create hits' out of products with early, high sales due to chance alone. At the market level, in individual sample paths it is possible to observe more diversity, even though on average diversity often decreases. Four, we show how basic design choices affect the outcome.