From conversations to mechanisms: aligning advertiser Incentives in ai-powered product recommendations

This research paper explores the development of efficient recommendation systems, such as AI shopping assistants, that manage multi-round interactions between a platform, advertisers, and users. The authors address a fundamental challenge: advertisers possess private, multi-dimensional information about both their own profit values and the user's preferences, creating incentives to manipulate recommendations. To solve this, the study introduces data-driven dynamic team mechanisms that align these conflicting incentives by conditioning advertiser payments on real-time user feedback. By utilizing behavioral signals like purchases and follow-up queries, the platform can create unbiased estimators of user tastes to ensure the most socially beneficial products...