Recommendations with Feedback
Abstract
We investigate the strategic role of a recommender who cares about accuracy and whose
recommendations influence product quality. In the presence of such feedback effects, recommendations
have a self-fulling property: the recommendation agent can select any firm
which will end up being the firm with the best quality. This produces important inefficiencies
which include: i) a lack of incentive to acquire valuable information, ii) a status quo
bias, and iii) the avoidance of risky innovations. Monetary payments from firms may work
in mitigating these inefficiencies, while competition between recommenders and monetary
payments from consumers are ineffective.
Zoom link: https://tilburguniversity.zoom.us/j/99469881627?pwd=TGxHS3Y3WVVWb0hobU5iVm5KbERQUT09
Meeting ID: 994 6988 1627
