TY  - UNPD
A1  - Bauer, Kevin
A1  - Pfeuffer, Nicolas
A1  - Abdel-Karim, Benjamin M.
A1  - Hinz, Oliver
A1  - Kosfeld, Michael
T1  - The terminator of social welfare? : The economic consequences of algorithmic discrimination
T2  - SAFE working paper series ; No. 287
N2  - Using experimental data from a comprehensive field study, we explore the causal effects of algorithmic discrimination on economic efficiency and social welfare. We harness economic, game-theoretic, and state-of-the-art machine learning concepts allowing us to overcome the central challenge of missing counterfactuals, which generally impedes assessing economic downstream consequences of algorithmic discrimination. This way, we are able to precisely quantify downstream efficiency and welfare ramifications, which provides us a unique opportunity to assess whether the introduction of an AI system is actually desirable. Our results highlight that AI systems’ capabilities in enhancing welfare critically depends on the degree of inherent algorithmic biases. While an unbiased system in our setting outperforms humans and creates substantial welfare gains, the positive impact steadily decreases and ultimately reverses the more biased an AI system becomes. We show that this relation is particularly concerning in selective-labels environments, i.e., settings where outcomes are only observed if decision-makers take a particular action so that the data is selectively labeled, because commonly used technical performance metrics like the precision measure are prone to be deceptive. Finally, our results depict that continued learning, by creating feedback loops, can remedy algorithmic discrimination and associated negative effects over time.
T3  - SAFE working paper - 287 
KW  - Algorithmic Discrimination
KW  - Artificial Intelligence
KW  - Game Theory
KW  - Economics
KW  - Batch Learning
Y1  - 2020
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/55235
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-552357
PB  - SAFE
CY  - Frankfurt am Main
ER  -