The Economics of Recommender Systems: Evidence from a Field Experiment on MovieLens

Guy Aridor, Duarte Gonçalves, Daniel Kluver, Ruoyan Kong, Joseph A. Konstan

Abstract: We conduct a 6 month field experiment on a movie-recommendation platform to identify if and how recommendation systems affect consumption. We use within-consumer randomization at the good level and elicit beliefs about unconsumed goods to disentangle exposure from informational effects. We have three experimental groups: (a) control, (b) exposed, and (c) recommended + exposed goods where only goods in (c) are recommended and we elicit beliefs about goods in (b) and (c). Comparing across these treatment arms we find recommendations increase consumption beyond its role in exposing goods to consumers. We provide support for an informational mechanism: recommendations affect consumers' beliefs, which in turn explain consumption. Recommendations reduce uncertainty about goods consumers are most uncertain about and induce information acquisition. Finally, we find evidence for spatial correlation in beliefs.