Edited by Roland T. Rust and Ming-Hui Huang
Chapter 18: Adaptive personalization of mobile information services
In the past decade, the development and use of information services have been expanding exponentially. Innovations in communication technology have reduced fixed and variable cost, and have increased the demand for these services. At the same time, due to increased market opportunities and low barriers to entry, competitive pressures have risen and service providers have tried to command higher margins by innovating and by differentiating their offerings (Rust and Chung 2006). Technology innovations have thus made personalization profitable in mass production (Varki and Rust 1998). As a consequence, consumer choice options continue to increase rapidly, especially in categories such as music, news, travel, entertainment, and games. As a result of the very large number of available alternatives, consumers of these services increasingly rely on product reviews. Almost three-quarters of consumers in the U.S. reported having done so. Over half of consumers consider user reviews to be the most trustworthy source of product information. However, online user reviews have limitations. These reviews rely on proactive user input, which many consumers are unwilling or unable to give. Furthermore, users differ in the way they use "star" rating scales or binary "like" items. Finally, online product and service ratings are subject to shilling attacks (see Chung et al. 2009 and Rust et al. 2010 for reviews). In most information service categories, personalization has not only become feasible, but has evolved as an important competitive strategy as well.
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