Brave New World? Human Welfare and Paternalistic AI

Abstract

“Choice Engines,” powered by Artificial Intelligence (AI) and authorized or required by law, might produce significant increases in human welfare. A key reason is that they can simultaneously (1) preserve autonomy and (2) help consumers to overcome inadequate information and behavioral biases, which can produce internalities, understood as costs that people impose on their future selves. Importantly, AI-powered Choice Engines might also take account of externalities, and they might nudge or require consumers to do so as well. Different consumers care about different things, of course, which is a reason to insist on a high degree of freedom of choice, even in the presence of internalities and externalities. Nonetheless, AI-powered Choice Engines might show behavioral biases, perhaps the same ones that human beings are known to show, perhaps others that have not been named yet, or perhaps new ones, not shown by human beings, that cannot be anticipated. It is also important to emphasize that AI-powered Choice Engines might be enlisted by insufficiently informed or self-interested actors, who might exploit inadequate information or behavioral biases, and thus reduce consumer welfare. AI-powered Choice Engines might also be deceptive or manipulative, and legal safeguards are necessary to reduce the relevant risks.

Keywords: paternalism, algorithm, generative AI, internalities, externalities, manipulation