The Economics of Professional Decision-Making: Can Artificial Intelligence Reduce Decision Uncertainty?

W Bentley MacLeod
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W Bentley MacLeod: Cowles Foundation for Research in Economics, Yale University

No 2475, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: This paper outlines an economic model that provides a framework for organising the growing literature on the performance of physicians and judges. The primary task of these professionals is to make decisions based on the information provided by their clients. The paper discusses professional decisions in terms of what Kahneman (2011) calls fast and slow decisions, known as System 1 and System 2 in cognitive science. Slow decisions correspond to the economist's model of rational choice, while System 1 (fast) decisions are high-speed, intuitive choices guided by training and human capital. This distinction is used to provide a model of decision-making under uncertainty based on Bewley (2011)'s theory of Knightian uncertainty to show that human values are an essential input to optimal choice. This, in turn, provides conditions under which artificial intelligence (AI) tools can assist professional decision-making, while pointing to cases where such tools need to explicitly incorporate human values in order to make better decisions.

Pages: 16 pages
Date: 2025-12-01
New Economics Papers: this item is included in nep-ain and nep-neu
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