On the (non-) reliance on algorithms—A decision-theoretic account.

A wealth of empirical evidence shows that people display opposite behaviors when deciding whether to rely on an algorithm, even if it is inexpensive to do so and using the algorithm should enhance their own performance. This paper develops a formal theory to explain some of these conflicting facts and submit new testable predictions. Drawing from decision analysis, I invoke two key notions: the 'value of information' and the 'value of control'. The value of information matters to users of algorithms like recommender systems and prediction machines, which essentially provide information. I find that ambiguity aversion or a subjective cost of employing an algorithm will tend to decrease the value of algorithmic information, while repeated exposure to an algorithm might not always increase this value. The value of control matters to users who may delegate decision making to an algorithm. I model how, under partial delegation, imperfect understanding of what the algorithm actually does (so the algorithm is in fact a black box) can cause algorithm aversion. Some possible remedies are formulated and discussed. • This paper initiates a formal decision-theoretic approach to make sense of the empirical evidence concerning people's attitudes towards algorithms. • This approach exploits two fundamental notions: the value of information and the value of control. • Ambiguity aversion will tend to decrease the value of algorithmic information; repeated exposure to algorithms may not increase it. • A first model of 'black box' algorithms is developed to analyze the value of keeping versus delegating control. [ABSTRACT FROM AUTHOR]