Getting in Contract with Large Language Models—An Agency Theory Perspective on Large Language Model Alignment

Adopting Large language models (LLMs) in organizations potentially revolutionizes our lives and work. However, they can generate off-topic, discriminating, or harmful content. This AI alignment problem often stems from misspecifications during the LLM adoption, unnoticed by the principal due to the LLM’s black-box nature. While various research disciplines investigated AI alignment, they neither address the information asymmetries between organizational adopters and black-box LLM agents nor consider organizational AI adoption processes. Therefore, we propose LLM ATLAS (LLM Agency Theory-Led Alignment Strategy) a conceptual framework grounded in agency (contract) theory, to mitigate alignment problems during organizational LLM adoption. We conduct a conceptual literature analysis using the organizational LLM adoption phases and the agency theory as concepts. Our approach results in (1) providing an extended literature analysis process specific to AI alignment methods during organizational LLM adoption and (2) providing a first LLM alignment problem-solution space.