"Recommendations with Feedback"
|Date||23 September 2021|
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 ine ciencies 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 ine ciencies, while competition between recommenders and monetary payments from consumers are ineffective.
*Co-authored with Ganesh Iyer (University of California, Berkeley)
More information about location, title and abstract will be published in due course. This seminar will be organised via Zoom. If you are interested in joining this seminar, please send an email to the secretariat of the Finance Group.