Algorithmic Decision-Making, Agency Costs, and Institution-Based Trust
Article
Article Title | Algorithmic Decision-Making, Agency Costs, and Institution-Based Trust |
---|---|
ERA Journal ID | 42168 |
Article Category | Article |
Authors | Dowding, Keith and Taylor, Brad |
Journal Title | Philosophy and Technology |
Journal Citation | 37 |
Article Number | 68 |
Number of Pages | 22 |
Year | 2024 |
Publisher | Springer |
Place of Publication | Netherlands |
ISSN | 1874-6314 |
1946-4789 | |
2210-5433 | |
2210-5441 | |
Digital Object Identifier (DOI) | https://doi.org/10.1007/s13347-024-00757-5 |
Web Address (URL) | https://doi.org/10.1007/s13347-024-00757-5 |
Abstract | Algorithm Decision Making (ADM) systems designed to augment or automate human decision-making have the potential to produce better decisions while also freeing up human time and attention for other pursuits. For this potential to be realised, however, algorithmic decisions must be sufficiently aligned with human goals and interests. We take a Principal-Agent (P-A) approach to the questions of ADM alignment and trust. In a broad sense, ADM is beneficial if and only if human principals can trust algorithmic agents to act faithfully on their behalf. This mirrors the challenge of facilitating P-A relationships among humans, but the peculiar nature of human-machine interaction also raises unique issues. The problem of asymmetric information is omnipresent but takes a different form in the context of ADM. Although the decision-making machinery of an algorithmic agent can in principle be laid bare for all to see, the sheer complexity of ADM systems based on deep learning models prevents straightforward monitoring. We draw on literature from economics and political science to argue that the problem of trust in ADM systems should be addressed at the level of institutions. Although the dyadic relationship between human principals and algorithmic agents is our ultimate concern, cooperation at this level must rest against an institutional environment which allows humans to effectively evaluate and choose among algorithmic alternatives. |
Keywords | Algorithmic decision-making; Principal-agent Theory; Asymmetric Information; Explainable AI; Institution-based Trust |
Contains Sensitive Content | Does not contain sensitive content |
ANZSRC Field of Research 2020 | 440703. Economic development policy |
Byline Affiliations | Australian National University |
School of Business | |
School of Humanities and Communication |
https://research.usq.edu.au/item/z7565/algorithmic-decision-making-agency-costs-and-institution-based-trust
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