Utilizing Marginal Net Utility for Recommendation …...Utilizing Marginal Net Utility for...
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Utilizing Marginal Net Utility for Recommendation in
E-commerce Jian Wang & Yi Zhang
Informa(on Retrieval and Knowledge Management Lab University of California, Santa Cruz
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• Will you like it? • Tradi(onal recommender systems recommend item with the highest predicted ra(ng
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Recommenda(on based on Predicted Ra(ng is Not Good for Consumers
• Will you purchase it? • Diminishing of return
• A ra(onal user will purchase the product with the highest marginal net u(lity
Total Utility, Marginal Utility
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Total U(lity
Marginal U(lity
Purchase Quan(ty
Total Utility, Marginal Utility
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Total U(lity
Marginal U(lity
Purchase Quan(ty
Total Utility, Marginal Utility
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Total U(lity
Marginal U(lity
Purchase Quan(ty
Total Utility, Marginal Utility
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Total U(lity
Marginal U(lity
Purchase Quan(ty
Marginal Net Utility
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Marginal Net Utility
= Marginal Utility - Price
1. Model the consumer behavior based on marginal net u6lity
2. Make recommenda6ons to maximize the marginal net u6lity for each user
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Making Consumers Happier
Outline
• Mo(va(on • Algorithm
– Basic economics: two exis(ng u(lity func(ons studied by economists
– Problem seOng
– Propose a new u(lity func(on tailored for recommender systems
• Experimental Results
• Conclusion 9 Jian Wang & Yi Zhang Utilizing Marginal Net Utility for Recommendation in E-commerce
Basic Economics: Linear Utility Function
• does not capture diminishing of return characteristic • most existing algorithms are implicitly based on this utility function
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• Total utility • purchase history • product ’s basic utility • purchase quantity of product in • marginal utility for the addition purchase of
Jian Wang & Yi Zhang Utilizing Marginal Net Utility for Recommendation in E-commerce
Basic Economics: Cobb-Douglas Utility
• diminishing of return rate is fixed • basic utility is not personalized
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• Total utility • purchase history • product ’s basic utility • purchase quantity of product in • marginal utility for the addition purchase of
Making Consumers Happier: Recommendation based on Marginal Net Utility
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Design • Design the u6lity func6onal form
Learn • Learn the u6lity func6on parameters from user history
Predict • Predict the marginal net u6lity of a product for a user using the func6on learned and user history
Rank • Rank products based on predicted marginal net u6lity
Problem SeOng
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day 1 day 3 day 7 day 10
Time t
Design the U(lity Func(onal Form
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• Total utility • purchase history • product ’s basic utility • purchase quantity of product in • marginal utility for the addition purchase of
Cobb-Douglas
New
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Design the U(lity Func(onal Form
• only same product will influence the marginal utility
New framework to revamp exis6ng recommenda6on algorithms
Revamp Exis(ng Algorithms
Marginal net utility
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Take Singular Value Decomposition (SVD) as an example
Learn the U(lity Func(on Parameters
Maximum A Posteriori Estimation
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Joint Likelihood
Purchase Likelihood Conditional on the marginal net utility
Outline
• Mo(va(on • Algorithm
• Experimental Results
• Conclusion
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Experiment Dataset
• More than 5-years purchase history from – 2004-01-01 to 2009-03-08
• 10,399 users, 65,551 products, and 102,915 unique (user, product) pairs
• 80% training, 10% validation, and 10% testing
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Experiment Design
• Methods to compare - - - same product - similar product
• Evaluation Metric
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General Analysis
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Conversion
Rate
K
conversion rate@K
87.39%
Further Analysis
• Consider all products – 13.79% repurchase – 90.64% new purchase
• Evaluate orders with the specific purchase type (repurchase or new purchase)
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Further Analysis
• The new u(lity func(on achieves significantly beber performance in both tasks
• Examples of Repurchases – diaper, pet food, etc. – Tend to be consumable products
• Examples of New purchases – computer, cell phone, bed frame, etc – Tend to be durable product – law of diminishing marginal u(lity
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Outline
• Mo(va(on • Algorithm
• Experimental Results
• Conclusion
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Conclusion
Jian Wang & Yi Zhang Utilizing Marginal Net Utility for Recommendation in E-commerce
• Introduce a new framework for recommender system in e-commerce sites
• Recommend products with the highest marginal net utility
• Take SVD as an example to revamp
• Achieve significant improvement in the conversion rate
Utilizing Marginal Net Utility for Recommendation in
E-commerce Jian Wang & Yi Zhang
Informa(on Retrieval and Knowledge Management Lab University of California, Santa Cruz
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Ques(ons?