If you recommend a product to me and I buy it, how much should you be paid by the seller? And if your sole interest is to maximize the amount paid to you by the seller for a sequence of recommendations, how should you recommend optimally if I become more inclined to ignore you with each irrelevant recommendation you make? Finding an answer to these questions is a key challenge in all forms of marketing that rely on and explore social ties; ranging from personal recommendations to viral marketing. In the first part of this paper, we show that there can be no pricing mechanism that is “truthful” with respect to the seller, and we use solution concepts from coalitional game theory, namely the Core, the Shapley Value, and the Nash Bargaining Solution, to derive provably “fair” prices for settings with one or multiple recommenders. We then investigate pricing mechanisms for the setting where recommenders have different “purchase arguments”. Here we show that it might be beneficial for the recommenders to withhold some of their arguments, unless anonymity-proof solution concepts, such as the anonymity-proof Shapley value, are used. In the second part of this paper, we analyze the setting where the recommendee loses trust in the recommender for each irrelevant recommendation. Here we prove that even if the recommendee regains her initial trust on each successful recommendation, the expected total profit the recommender can make over an infinite period is bounded. This can only be overcome when the recommendee also incrementally regains trust during periods without any recommendation. Here, we see an interesting connection to “banner blindness”, suggesting that showing fewer ads can lead to a higher long-term profit.
It should be clear that we are addressing the problem of to recommend, a problem typically encountered by stores such as Amazon and usually solved using collaborative filtering'' techniques @cite_19 @cite_21 . In the first part of this paper (), we assume that the recommender recommends an item because she believes this item to be of interest to the recommendee, and the algorithm used by her to determine potential interest is irrelevant. In the second part (), the recommender is profit maximizing and now only cares about the reward offered to her by the seller and the probability @math that the recommendee will buy the item. In this model the what'' is absorbed into @math and the recommender simply decides on to recommend.
@cite_19 @cite_21
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This paper describes a technique for making personalized recommendations from any type of database to a user based on similarities between the interest profile of that user and those of other users. In particular, we discuss the implementation of a networked system called Ringo, which makes personalized recommendations for music albums and artists. Ringo's database of users and artists grows dynamically as more people use the system and enter more information. Four different algorithms for making recommendations by using social information filtering were tested and compared. We present quantitative and qualitative results obtained from the use of Ringo by more than 2000 people. Recommender systems have been evaluated in many, often incomparable, ways. In this article, we review the key decisions in evaluating collaborative filtering recommender systems: the user tasks being evaluated, the types of analysis and datasets being used, the ways in which prediction quality is measured, the evaluation of prediction attributes other than quality, and the user-based evaluation of the system as a whole. In addition to reviewing the evaluation strategies used by prior researchers, we present empirical results from the analysis of various accuracy metrics on one content domain where all the tested metrics collapsed roughly into three equivalence classes. Metrics within each equivalency class were strongly correlated, while metrics from different equivalency classes were uncorrelated.