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Maximizing revenue from strategic recommendations under decaying trust

Abstract

Suppose your sole interest in recommending a product to me is to maximize the amount paid to you by the seller for a sequence of recommendations. How should you recommend optimally if I become more inclined to ignore you with each irrelevant recommendation you make? Finding an answer to this question is a key challenge in all forms of marketing that rely on and explore social ties; ranging from personal recommendations to viral marketing. We prove that even if the recommendee regains her initial trust on each successful recommendation, the expected revenue the recommender can make over an infinite period due to payments by the seller is bounded. This can only be overcome when the recommendee also incrementally regains trust during periods without any recommendation. Here, we see a connection to ?banner blindness?, suggesting that showing fewer ads can lead to a higher long-term revenue.

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Authors
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Citation
Category
Paper in Conference Proceedings or in Workshop Proceedings (Paper)
Event Title
21st ACM International Conference on Information and Knowledge Management (CIKM)
Divisions
Theory and Applications of Algorithms
Event Location
Maui, USA
Event Type
Conference
Event Dates
29 Oct - 02 Nov 2012
Series Name
CIKM'12 21st ACM International Conference on Information and Knowledge Management
Publisher
ACM
Page Range
pp. 2283-2286
Date
2012
Official URL
http://dl.acm.org/citation.cfm?id=2396761
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