Utilizing marginal net utility for recommendation in e-commerce

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Utilizing marginal net utility for recommendation in e-commerce
Traditional recommendation algorithms often select products with the highest predicted ratings to recommend. However, earlier research in economics and marketing indicates that a consumer usually makes purchase decision(s) based on the product’s marginal net utility (i.e., the marginal utility minus the product price). Utility is defined as the satisfaction or pleasure user u gets when purchasing the corresponding product. A rational consumer chooses the product to purchase in order to maximize the total net utility. In contrast to the predicted rating, the marginal utility of a product depends on the user’s purchase history and changes over time. According to the Law of Diminishing Marginal Utility, many products have the decreasing marginal utility with the increase of purchase count, such as cell phones, computers, and so on. Users are not likely to purchase the same or similar product again in a short time if they already purchased it before. On the other hand, some products,...
Jian Wang, Yi Zhang
Added 17 Sep 2011
Updated 17 Sep 2011
Type Journal
Year 2011
Authors Jian Wang, Yi Zhang
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