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The Allocation of Decision Authority to Human and Artificial Intelligence

Author

Listed:
  • Athey, Susan

    (Stanford U)

  • Bryan, Kevin

    (U of Toronto)

  • Gans, Joshua S.

    (U of Toronto)

Abstract

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 AIs are trained.

Suggested Citation

  • Athey, Susan & Bryan, Kevin & Gans, Joshua S., 2020. "The Allocation of Decision Authority to Human and Artificial Intelligence," Research Papers 3856, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3856
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    Cited by:

    1. Lyu, Wenjing & Liu, Jin, 2021. "Soft skills, hard skills: What matters most? Evidence from job postings," Applied Energy, Elsevier, vol. 300(C).
    2. Maha Kalai & Hamdi Becha & Kamel Helali, 2024. "Effect of artificial intelligence on economic growth in European countries: a symmetric and asymmetric cointegration based on linear and non-linear ARDL approach," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 13(1), pages 1-37, December.
    3. Laura Abrardi & Carlo Cambini & Laura Rondi, 2022. "Artificial intelligence, firms and consumer behavior: A survey," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 969-991, September.
    4. Talia Gillis & Bryce McLaughlin & Jann Spiess, 2021. "On the Fairness of Machine-Assisted Human Decisions," Papers 2110.15310, arXiv.org, revised Sep 2023.
    5. Agrawal, Ajay & Gans, Joshua S. & Goldfarb, Avi, 2024. "Prediction machines, insurance, and protection: An alternative perspective on AI’s role in production," Journal of the Japanese and International Economies, Elsevier, vol. 72(C).
    6. Antonio Rodríguez Andrés & Voxi Heinrich S. Amavilah & Abraham Otero, 2021. "Evaluation of technology clubs by clustering: a cautionary note," Applied Economics, Taylor & Francis Journals, vol. 53(52), pages 5989-6001, November.
    7. Ashesh Rambachan & Jon Kleinberg & Sendhil Mullainathan & Jens Ludwig, 2020. "An Economic Approach to Regulating Algorithms," NBER Working Papers 27111, National Bureau of Economic Research, Inc.
    8. Ari Hyytinen & Petri Rouvinen & Mika Pajarinen & Joosua Virtanen, 2023. "Ex Ante Predictability of Rapid Growth: A Design Science Approach," Entrepreneurship Theory and Practice, , vol. 47(6), pages 2465-2493, November.
    9. Bauer, Kevin & von Zahn, Moritz & Hinz, Oliver, 2023. "Please take over: XAI, delegation of authority, and domain knowledge," SAFE Working Paper Series 394, Leibniz Institute for Financial Research SAFE.
    10. Lyu, Wenjing & Liu, Jin, 2021. "Artificial Intelligence and emerging digital technologies in the energy sector," Applied Energy, Elsevier, vol. 303(C).
    11. Caro-Burnett, Johann & Kaneko, Shinji, 2022. "Is Society Ready for AI Ethical Decision Making? Lessons from a Study on Autonomous Cars," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).
    12. Hyunjin Kim & Edward L. Glaeser & Andrew Hillis & Scott Duke Kominers & Michael Luca, 2024. "Decision authority and the returns to algorithms," Strategic Management Journal, Wiley Blackwell, vol. 45(4), pages 619-648, April.
    13. Fabian Gaessler & Henning Piezunka, 2023. "Training with AI: Evidence from chess computers," Strategic Management Journal, Wiley Blackwell, vol. 44(11), pages 2724-2750, November.
    14. Bryce McLaughlin & Jann Spiess, 2022. "Algorithmic Assistance with Recommendation-Dependent Preferences," Papers 2208.07626, arXiv.org, revised Oct 2025.
    15. Jonathan Gruber & Benjamin R. Handel & Samuel H. Kina & Jonathan T. Kolstad, 2020. "Managing Intelligence: Skilled Experts and AI in Markets for Complex Products," NBER Working Papers 27038, National Bureau of Economic Research, Inc.
    16. Laura Blattner & Scott Nelson & Jann Spiess, 2021. "Unpacking the Black Box: Regulating Algorithmic Decisions," Papers 2110.03443, arXiv.org, revised May 2024.
    17. Marie Obidzinski & Yves Oytana, 2022. "Advisory algorithms and liability rules," Working Papers hal-04222291, HAL.
    18. Feldhaus, Christoph & Lingens, Jörg & Löschel, Andreas & Zunker, Gerald, 2022. "Encouraging consumer activity through automatic switching of the electricity contract - A field experiment," Energy Policy, Elsevier, vol. 164(C).
    19. Mustafa Dogan & Alexandre Jacquillat & Pinar Yildirim, 2024. "Strategic automation and decision‐making authority," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 33(1), pages 203-246, January.
    20. Xienan Cheng & Mustafa Dogan & Pinar Yildirim, 2025. "Artificial Intelligence in Team Dynamics: Who Gets Replaced and Why?," Papers 2506.12337, arXiv.org.
    21. Marie Obidzinski & Yves Oytana, 2022. "Prediction, human decision and liability rules, CRED Working paper No 2022-06," Working Papers hal-04034871, HAL.
    22. Bryce McLaughlin & Jann Spiess, 2024. "Designing Algorithmic Recommendations to Achieve Human-AI Complementarity," Papers 2405.01484, arXiv.org, revised Oct 2024.

    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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