Diversity of preferences can increase collective welfare in sequential exploration problems

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Abstract

In search engines, online marketplaces and other human-computer interfaces large collectives of individuals sequentially interact with numerous alternatives of varying quality. In these contexts, trial and error (exploration) is crucial for uncovering novel high-quality items or solutions, but entails a high cost for individual users. Self-interested decision makers, are often better off imitating the choices of individuals who have already incurred the costs of exploration. Although imitation makes sense at the individual level, it deprives the group of additional information that could have been gleaned by individual explorers. In this paper we show that in such problems, preference diversity can function as a welfare enhancing mechanism. It leads to a consistent increase in the quality of the consumed alternatives that outweighs the increased cost of search for the users.
Original languageEnglish
Title of host publicationCollective Intelligence 2017
Number of pages4
Publication date2017
Publication statusPublished - 2017
Event5th conference on Collective Intelligence - Brooklyn , New York, United States
Duration: 15. Jun 201716. Jun 2017

Conference

Conference5th conference on Collective Intelligence
LocationBrooklyn
CountryUnited States
CityNew York
Period15/06/201716/06/2017

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