Internet Recommendation Systems

TLDR

Online firms such as Yahoo! and Amazon.com recommend products using content and collaborative filtering methods. The study evaluates existing recommendation methods and proposes a Bayesian preference model that integrates multiple information sources. The Bayesian model incorporates user preference heterogeneity and unobserved product heterogeneity via interactions between unobserved product attributes and customer characteristics, and is estimated using Markov chain Monte Carlo.

Abstract

Several online firms, including Yahoo!, Amazon.com , and Movie Critic, recommend documents and products to consumers. Typically, the recommendations are based on content and/or collaborative filtering methods. The authors examine the merits of these methods, suggest that preference models used in marketing offer good alternatives, and describe a Bayesian preference model that allows statistical integration of five types of information useful for making recommendations: a person's expressed preferences, preferences of other consumers, expert evaluations, item characteristics, and individual characteristics. The proposed method accounts for not only preference heterogeneity across users but also unobserved product heterogeneity by introducing the interaction of unobserved product attributes with customer characteristics. The authors describe estimation by means of Markov chain Monte Carlo methods and use the model with a large data set to recommend movies either when collaborative filtering methods are viable alternatives or when no recommendations can be made by these methods.