MIT Sloan Management Review Article on The Hidden Side Effects of Recommendation Systems

Both consumers and businesses should be aware of potential decision-making biases introduced by online recommendations.

Recommendation engines influence the choices we make every day — what book to read next, which song to download, which person to date.

At their best, smart systems serve buyers and sellers alike: Consumers save the time and effort of wading through the vast possibilities of the digital marketplace, and businesses build loyalty and drive sales through differentiated experiences.

But, as with many other new technologies, digital recommendations are also a source of unintended consequences. Our research shows that recommendations do more than just reflect consumer preferences — they actually shape them. If this sounds like a subtle distinction, it is not. Recommendation systems have the potential to fuel biases and affect sales in unexpected ways. Our findings have important implications for recommendation engine design, not just in the music industry — the basis of our study — but in any setting where retailers use recommendation algorithms to improve customer experience and drive sales.