Human Judgment and AI Pricing
- (pp. 58-63)
AbstractThis paper examines the pricing choices of a provider of artificial intelligence (AI) services. It does so in the context of AI providing predictions to a decision-maker who also exercises what we term judgment; specifically, the discovery of payoffs from action/state pairs. An AI facilitates the decision-maker obtaining judgment through experience, which is one source of demand for AI services. The other source is prediction when (and if) the decision-maker has a need for state-contingent decision-making. We show that the need to encourage learning means that the AI provider is constrained in its ability to extract rents from decision-makers.
CitationAgrawal, Ajay, Joshua S. Gans, and Avi Goldfarb. 2018. "Human Judgment and AI Pricing." AEA Papers and Proceedings, 108: 58-63. DOI: 10.1257/pandp.20181022
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- M15 IT Management