Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/302143 
Year of Publication: 
2024
Series/Report no.: 
Discussion Papers No. 24-06
Publisher: 
University of Bern, Department of Economics, Bern
Abstract: 
This paper investigates the value of recommendations for disseminating economic information, with a focus on frictions resulting from preference heterogeneity. We consider Bayesian expected-payoff maximizers who receive non-strategic recommendations by other consumers. The paper provides conditions under which different consumer types accept these recommendations. Moreover, we assess the overall value of a recommendation system and the determinants of that value. Our analysis highlights the importance of disentangling objective information from subjective preferences when designing value-maximizing recommendation systems.
Subjects: 
recommendations
preference heterogeneity
optimal design
JEL: 
D02
D47
D83
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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