the basic concept of neighbourhood for item-based recommendation comes from
this paper:

http://portal.acm.org/citation.cfm?id=371920.372071

this is the idea:

"The fact that we only need a small fraction of similar items to compute
predictions leads us to an alternate model-based scheme. In this scheme, we
retain only a small number of similar items. For each item j we compute the
k most similar items. We term k as the model size. Based on this model
building step, our prediction generation algorithm works as follows. For
generating predictions for a user u on item i, our algorithm first
retrieves the precomputed k most similar items corresponding to the target
item i. Then it looks how many of those k items were purchased by the user
u, based on this intersection then the prediction is computed using basic
item-based collaborative filtering algorithm."

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