Steering via Algorithmic Recommendations

Hsin-Tien Tiffany Tsai (National University of Singapore)

23 mars 2021, 14h00–15h00

Zoom Meeting

Economics of Platforms Seminar


This paper studies whether market structure affects algorithmic recommendations in dominant platforms. We focus on the dual role of Amazon.com as a platform owner and retailer. We find that products sold by Amazon receive substantially more "Frequently Bought Together" recommendations across product categories and popularity deciles. To establish causality, we exploit within-product variation generated by Amazon stockouts. We find that when Amazon is out of stock, the identical product sold by third-party sellers receives 8% fewer recommendations. The pattern can be explained by economic incentives of steering and cannot be explained by consumer preference. Furthermore, the steering lowers recommendation efficiency.

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