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Does AI Cheapen Talk? Theory and Evidence From Global Entrepreneurship and Hiring

Author

Listed:
  • Cowgill, Bo

    (Columbia Business School)

  • Hernandez-Lagos, Pablo

    (Sy Syms School of Business at Yeshiva University)

  • Wright, Nataliya

    (Columbia Business School)

Abstract

Screening human capital based on signals such as job applications or entrepreneurial pitches is crucial for organizations. Signals are often informative insofar as they require differential knowledge and effort to produce. Generative AI (GAI) complicates screening by lowering the cost of producing impressive signals. We model the informational effects of GAI, showing that applicants' access to GAI can increase---but also decrease---an evaluator's screening mistakes. This result depends on how GAI affects experts' signals compared to non-experts'. Using experiments in hiring and startup investing, we estimate that senders' access to GAI (ChatGPT) lowers screening accuracy by 4-9% for employers and startup investors. Consistent with our model, senders' access to GAI also improves screening accuracy in some settings---in our case, among senders from non-English-speaking countries. These results show that GAI can profoundly shape screening accuracy.

Suggested Citation

  • Cowgill, Bo & Hernandez-Lagos, Pablo & Wright, Nataliya, 2026. "Does AI Cheapen Talk? Theory and Evidence From Global Entrepreneurship and Hiring," IZA Discussion Papers 18442, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18442
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    References listed on IDEAS

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    1. Bengt Holmström, 1999. "Managerial Incentive Problems: A Dynamic Perspective," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 169-182.
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    Keywords

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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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