Lower Bias, Higher Welfare: How Creator Competition Reshapes Bias-Variance Tradeoff in Recommendation Platforms?

Abstract

Understanding the bias-variance tradeoff in user representation learning is essential for improving recommendation quality in modern content platforms. While well studied in static settings, this tradeoff becomes significantly more complex when content creators strategically adapt to platform incentives. To analyze how such competition reshapes the tradeoff for maximizing user welfare, we introduce the Content Creator Competition with Bias-Variance Tradeoff framework, a tractable game-theoretic model that captures the platform's decision on regularization strength in user feature estimation. We derive and compare the platform's optimal policy under two key settings: a non-strategic baseline with fixed content and a strategic environment where creators compete in response to the platform's algorithmic design. Our theoretical analysis in a stylized model shows that, compared to the non-strategic environment, content creator competition shifts the platform's optimal policy toward weaker regularization, thereby favoring lower bias in the bias-variance tradeoff. To validate and assess the robustness of these insights beyond the stylized setting, we conduct extensive experiments on both synthetic and real-world benchmark datasets. The empirical results consistently support our theoretical conclusion: in strategic environments, reducing bias leads to higher user welfare. These findings offer practical implications for the design of real-world recommendation algorithms in the presence of content creator competition.