Maximizing Marginal Utility per Dollar for Economic Recommendation
Yingqiang Ge, Shuyuan Xu, Shuchang Liu, Shijie Geng, Zuohui Fu, Yongfeng Zhang · 2019
Understanding the economic nature of consumer decisions in e-Commerce is important to personalized recommendation systems. Established economic theories claim that informed consumers always attempt to maximize their utility by choosing the items of the largest marginal utility per dollar (MUD) within their budgets. For example, gaining 5 dollars of extra benefit by spending 10 dollars makes a consumer much more satisfied than having the same amount of extra benefit by spending 20 dollars, although the second product may have higher absolute utility value. Meanwhile, making purchases online may be risky decisions that could cause dissatisfaction. For example, people may give low ratings towards purchased items that they thought they would like when placing the order. Therefore, the design of recommender systems should also take users' risk attitudes into consideration to better learn consumer behaviors.