Work

Biased recommendations and differentially informed consumers

Year: 2025

Type: article

Abstract: We consider a monopolist selling a product to differentially informed consumers: some consumers are uncertain about their tastes, whereas other consumers are perfectly informed. The monopolist sets a uniform price and can make personalized product recommendations. We characterize conditions under which the monopolist biases its recommendations—that is, some consumers with values below the marginal cost follow the recommendation to buy the product or some consumers with values above the marginal cost follow the recommendation not to buy the product.

Source: Economic Theory Bulletin

DOI: 10.1007/s40505-025-00292-2

Authors: Martin Peitz, Anton Sobolev

Institution: University of Mannheim

Language: English

Topic: Consumer Market Behavior and Pricing

Subfield: Marketing

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,090

Funder: Deutsche Forschungsgemeinschaft