Man and Machine: The Impact of Machine Input on Human Decision Making Under Limited Attention
Prof. Tamer Boyacı, Michael Diekmann Chair in Management Science, Dean of Faculty, ESMT Berlin
January 31, Friday, 1:40 p.m.
EA-409
The interaction between machine-based intelligence and human decision making has ever been a topic of interest and debate, but arguably never as intensively as in today’s digital era with AI and machine learning applications. The consensus is that benefiting from immense computing capabilities, machines and machine-based algorithms can perform certain tasks with incredible accuracy. Human decision makers on the other hand are more flexible and adaptive but they are limited in terms of cognitive capacities, which naturally make them more prone to forming erroneous assessments. We model these salient characteristics in a general framework of decision making under uncertainty. Utilizing rational inattention as the rational-behavioral model of the human, we investigate the impact of receiving highly accurate machine prediction on a part of the uncertainty on human decision making – in terms of not only decisions and accuracy, but also on the amount of cognitive effort (time, attention, capacity) spent. We show that machine input always improves overall decision accuracy of the human, but it may cause certain types of mistakes to be more pronounced (false-positives for example). Interestingly, even though machine input perfectly resolves part of the prevalent uncertainty, it can induce the human decision maker to spend more cognitive effort overall. We are able to identify when and why such results are obtained.
Tamer is the dean of faculty and research, professor of management science and the first holder of the Michael Diekmann Chair in Management Science. He joined ESMT Berlin in 2015 and served as the director of research between January 2017 and August 2019. The Center for Sustainable Business and Leadership was also directed by Tamer after its founding in 2019. Previously, Tamer was a professor of operations management and a Desautels Faculty Scholar at McGill University in Quebec, Canada. Tamer received his PhD, MPhil, and MSc from Columbia University, New York, USA. Tamer Boyaci’s research is wide in scope and cross-disciplinary, often cutting across supply chain operations, marketing, economics, and sustainability. His most recent work focuses on behavioral decision-making, rational inattention, and applications to business operations. Another major research interest of Tamer links operations to sustainability. His latest works in this domain dwell on circular economy, take-back legislation, sustainable product design and innovation. Tamer’s scholarly work has appeared in the most prestigious international journals of his discipline, including Management Science, Operations Research, Manufacturing & Service Operations Management, Production and Operations Management, among others.