Tractable consumer choice

Zhao

Proceedings of the 25th International Conference on World Wide Web

et al. 2016

Self Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Discussion papers of the WZB serve to disseminate the research results of work in progress prior to publication to encourage the exchange of ideas and academic debate. Inclusion of a paper in the discussion paper series does not constitute publication and should not limit publication in any other venue. The discussion papers published by the WZB represent the views of the respective author(s) and not of the institute as a whole. Terms of use: Documents in Copyright remains with the authors.ABSTRACT A prime function of many major World Wide Web applications is Online Service Allocation (OSA), the function of matching individual consumers with particular services/goods (which may include loans or jobs as well as products) each with its own producer. In the applications of interest, consumers are free to choose, so OSA usually takes the form of personalized recommendation or search in practice. The performance metrics of recommender and search systems currently tend to focus on just one side of the match, in some cases the consumers (e.g. satisfaction) and in other cases the producers (e.g., profit). However, a sustainable OSA platform needs benefit both consumers and producers; otherwise the neglected party eventually may stop using it.In this paper, we show how to adapt economists' traditional idea of maximizing total surplus (the sum of consumer net benefit and producer profit) to the heterogeneous world of online service allocation, in an effort to promote the web intelligence for social good in online eco-systems. Modifications of traditional personalized recommendation algorithms enable us to apply Total Surplus Maximization (TSM) to three very different types of real-world tasks -e-commerce, P2P lending and freelancing. The results for all three tasks suggest that TSM compares very favorably to currently popular approaches, to the benefit of both producers and consumers.

Section: Utilitymentioning

confidence: 99%

Section: Personalized Utilitymentioning

confidence: 99%

Section: E-commercementioning

confidence: 99%

Section: Online Freelancing Platformsmentioning

confidence: 99%

See 2 more Smart Citations

Economic Recommendation with Surplus Maximization

Zhao

Proceedings of the 25th International Conference on World Wide Web

et al. 2016

Self Cite

“…Barring that, surprisingly, a tractable solution to this basic problem is not known within the standard context of consumer choice. The reason for that is the straight jacket imposed on us by the universally accepted view of the consumer problem (due to Hicks and Allen, 1934), which frames it as utility maximization subject to a budget constraint: even if -and this is a big if -our agent knew his budget for buying A and B; he would only be able to satisfy his budget constraint in 1 To simplify the equations, we consider a single alternative good. The generalization to many di¤erent potential baskets is straightforward.…”

Section: Introductionmentioning

confidence: 99%

Tractable valuations under uncertainty

Sákovics

2015

Economics Letters

Self Cite

Review of Economic Studies

Superiority-Seeking and the Preference for Exclusion

Imas,

Madarász

2023

We propose that a person’s desire to consume an object or possess an attribute increases in how much others want but cannot have it. We term this motive imitative superiority-seeking, and show that it generates preferences for exclusion that help explain a host of market anomalies and make novel predictions in a variety of domains. In bilateral exchange, there is a reluctance to trade, leading to an endowment effect. People’s value of consuming a good increases in its scarcity, which generates a motive for firms and organizations to engage in exclusionary policies. A monopolist producing at constant marginal cost can increase profits by randomly excluding buyers relative to the standard optimal mechanism of posting a common price. In the context of auctions, a seller can extract greater revenues by randomly barring a subset of consumers from bidding. Moreover, such non-price-based exclusion leads to higher revenues than the classic optimal sales mechanism. A series of experiments provides direct support for these predictions. In basic exchange, a person’s willingness to pay for a good increases as more people are explicitly barred from the opportunity to acquire it. In auctions, randomly excluding people from the opportunity to bid substantially increases bids amongst those who retain this option. Consistent with our predictions, exclusion leads to bigger gains in expected revenue than increasing competition through inclusion. Our model of superiorityseeking generates ‘Veblen effects,’ rationalizes attitudes against redistribution, and provides a novel motive for social exclusion and discrimination.