Quality Certificates Alleviate Consumer Aversion to Sponsored Search Advertising

Hui, Xiang; Li, Meng

doi:10.2139/ssrn.4155772

Cited by 2 publications

(1 citation statement)

References 56 publications

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“…Finally, the stock versus flow result captures the dynamics in which the algorithm, because of a technical glitch, ends up in a unique scenario of making a bad recommendation. Whereas a firm would never willfully experiment with a bad recommendation, such system glitches are common (Heath 2022, Mehta andSingh 2022) and are analyzed in academic contexts through online platforms such as eBay (Hui and Liu 2022) and omnichannel retailers (Narang et al 2020). This suggests that human recommendations could substitute for bad automated recommendations, similar to a setting where human expertise is used to flag harmful content to ensure that the algorithms do not amplify bad recommendations (Scott and Kayali 2020).…”

Section: External Validity and Implicationsmentioning

confidence: 99%

The Editor and the Algorithm: Recommendation Technology in Online News

Peukert,

Sen,

Claussen

2023

Management Science

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We run a field experiment to study the relative performance of human curation and automated personalized recommendation technology in the context of online news. We build a simple theoretical model that captures the relative efficacy of personalized algorithmic recommendations and curation based on human expertise. We highlight a critical tension between detailed, yet potentially narrow, information available to the algorithm versus broad (often private), but not scalable, information available to the human editor. Empirically, we show that, on average, algorithmic recommendations can outperform human curation with respect to clicks, but there is significant heterogeneity in this treatment effect. The human editor performs relatively better in the absence of sufficient personal data and when there is greater variation in preferences. These results suggest that reverting to human curation can mitigate the drawbacks of personalized algorithmic recommendations. Our computations show that the optimal combination of human curation and automated recommendation technology can lead to an increase of up to 13% in clicks. In absolute terms, we provide thresholds for when the estimated gains are larger than our estimate of implementation costs. This paper was accepted by Chris Forman, information systems. Funding: C. Peukert acknowledges funding from the Swiss National Science Foundation [Grant No. 100013_197807]. Supplemental Material: The e-companion and data files are available at https://doi.org/10.1287/mnsc.2023.4954 .

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Section: External Validity and Implicationsmentioning

confidence: 99%

The Editor and the Algorithm: Recommendation Technology in Online News

Peukert,

Sen,

Claussen

2023

Management Science

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Targeted incentives, broad impacts: Evidence from an E-commerce platform

2023

Self Cite

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Digital platforms sometimes offer incentives to a subset of sellers to nudge behavior, possibly affecting the behavior of all sellers in the equilibrium. In this paper, we study a policy change on a large e-commerce platform that offers financial incentives only to platform-certified sellers when they provide fast handling and generous return policies on their listings. We find that both targeted and non-targeted sellers become more likely to adopt the promoted behavior after the policy change. Exploiting a large number of markets on the platform, we find that in markets with a larger proportion of the targeted population-hence more affected by the policy change-nontargeted sellers are more likely to adopt the promoted behavior and experience a larger increase in sales and equilibrium prices. This finding is consistent with our key insight that a targeted incentive may increase demand for non-targeted sellers when both platform certificates and the promoted behaviors are quality signals. Our results have managerial implications for digital platforms that use targeted incentives.

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Quality Certificates Alleviate Consumer Aversion to Sponsored Search Advertising

Cited by 2 publications

References 56 publications

The Editor and the Algorithm: Recommendation Technology in Online News

The Editor and the Algorithm: Recommendation Technology in Online News

Targeted incentives, broad impacts: Evidence from an E-commerce platform

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