The Allocation of Decision Authority to Human and Artificial Intelligence

The allocation of decision authority by a principal to either a human agent or an artificial intelligence (AI) is examined. The principal trades off an AI’s more aligned choice with the need to motivate the human agent to expend effort in learning choice payoffs. When agent effort is desired, it is shown that the principal is more likely to give that agent decision authority, reduce investment in AI reliability and adopt an AI that may be biased. Organizational design considerations are likely to impact on how AI’s are trained.

Keywords: artificial intelligence, decision authority, motivation, real authority, machine learning, bias

JEL Classification: C7

Suggested Citation: Suggested Citation

Carleton Athey, Susan and Bryan, Kevin and Gans, Joshua S., The Allocation of Decision Authority to Human and Artificial Intelligence (January 10, 2020). Stanford University Graduate School of Business Research Paper No. 3517287, Available at SSRN: https://ssrn.com/abstract=3517287 or http://dx.doi.org/10.2139/ssrn.3517287