Marketing Papers

Document Type

Technical Report

Date of this Version

2016

Publication Source

Management Science

Volume

64

Issue

3

Start Page

1155

Last Page

1170

DOI

10.1287/mnsc.2016.2643

Abstract

Although evidence-based algorithms consistently outperform human forecasters, people often fail to use them after learning that they are imperfect, a phenomenon known as algorithm aversion. In this paper, we present three studies investigating how to reduce algorithm aversion. In incentivized forecasting tasks, participants chose between using their own forecasts or those of an algorithm that was built by experts. Participants were considerably more likely to choose to use an imperfect algorithm when they could modify its forecasts, and they performed better as a result. Notably, the preference for modifiable algorithms held even when participants were severely restricted in the modifications they could make (Stuides 1-3). In fact, our results suggest that participants' preference for modifiable algorithms was indicative of a desire for some control over the forecasting outcome, and not for a desire for greater control over the forecasting outcome, as participants' preference for modifiable was relatively insensitive to the magnitude of the modifications they were able to make (Study 2). Additionally, we found that giving participants the freedom to modify an imperfect algorithm made them feel more satisfied with the forecasting process, more likely to believe that the algorithm was superior, and more likely to choose to use an algorithm to make subsequent forecasts (Study 3). This research suggests that one can reduce algorithm aversion by giving people some control—even a slight amount—over an imperfect algorithm's forecast.

Copyright/Permission Statement

Originally published in Management Science © 2016 INFORMS This is a pre-final version of the article. The final version can be found at http://dx.doi.org/10.1287/mnsc.2016.2643

Keywords

Decision making, decision aids, heuristics and biases, forecasting, confidence

Share

COinS
 

Date Posted: 15 June 2018

This document has been peer reviewed.