Ethics and AI Startups

37 Pages Posted: 2 Aug 2021 Last revised: 4 Oct 2021

See all articles by James E. Bessen

James E. Bessen

Technology & Policy Research Initiative, BU School of Law

Stephen Michael Impink

New York University (NYU) - Leonard N. Stern School of Business

Lydia Reichensperger

Technology & Policy Research Initiative, BU School of Law

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business

Date Written: July 30, 2021

Abstract

Artificial Intelligence (AI) startups use training data as direct inputs in product development. These firms must balance numerous trade-offs between ethical issues and data access without substantive guidance from regulators or existing judicial precedence. We survey these startups to determine what actions they have taken to address these ethical issues and the consequences of those actions. We find that 58% of these startups have established a set of AI principles. Startups with data-sharing relationships with large high-technology firms (i.e., Amazon, Google, Microsoft), that were negatively impacted by privacy regulations, or with prior (non-seed) funding from institutional investors are more likely to establish ethical AI principles. Lastly, startups with data-sharing relationships with large high-technology firms and prior regulatory experience with GDPR are more likely to incur negative business outcomes, like dropping training data or turning down business, to adhere to their ethical AI policies.

Keywords: artificial intelligence, ethics, data, startup

JEL Classification: O33, J21, L10

Suggested Citation

Bessen, James E. and Impink, Stephen Michael and Reichensperger, Lydia and Seamans, Robert, Ethics and AI Startups (July 30, 2021). Available at SSRN: https://ssrn.com/abstract=3895939 or http://dx.doi.org/10.2139/ssrn.3895939

James E. Bessen (Contact Author)

Technology & Policy Research Initiative, BU School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Stephen Michael Impink

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Lydia Reichensperger

Technology & Policy Research Initiative, BU School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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