Watch Me Improve—Algorithm Aversion and Demonstrating the Ability to Learn

Abstract Owing to advancements in artificial intelligence (AI) and specifically in machine learning, information technology (IT) systems can support humans in an increasing number of tasks. Yet, previous research indicates that people often prefer human support to support by an IT system, even if the latter provides superior performance – a phenomenon called algorithm aversion. A possible cause of algorithm aversion put forward in literature is that users lose trust in IT systems they become familiar with and perceive to err, for example, making forecasts that turn out to deviate from the actual value. Therefore, this paper evaluates the effectiveness of demonstrating an AI-based system’s ability to learn as a potential countermeasure against algorithm aversion in an incentive-compatible online experiment. The experiment reveals how the nature of an erring advisor (i.e., human vs. algorithmic), its familiarity to the user (i.e., unfamiliar vs. familiar), and its ability to learn (i.e., non-learning vs. learning) influence a decision maker’s reliance on the advisor’s judgement for an objective and non-personal decision task. The results reveal no difference in the reliance on unfamiliar human and algorithmic advisors, but differences in the reliance on familiar human and algorithmic advisors that err. Demonstrating an advisor’s ability to learn, however, offsets the effect of familiarity. Therefore, this study contributes to an enhanced understanding of algorithm aversion and is one of the first to examine how users perceive whether an IT system is able to learn. The findings provide theoretical and practical implications for the employment and design of AI-based systems.