Seeing the Goal, Missing the Truth: Human Accountability for AI Bias

Sean S. Cao, Wei Jiang and Hui Xu

No 35142, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This research explores how human-defined goals influence the behavior of Large Language Models (LLMs) through purpose-conditioned cognition. Using financial prediction tasks, we show that revealing the downstream use (e.g., predicting stock returns or earnings) of LLM outputs leads the LLM to generate biased sentiment and competition measures, even though these measures are intended to be downstream task–independent. Goal-aware prompting shifts these intermediate measures toward the disclosed downstream objective, producing in-sample overfitting. Specifically, purpose leakage improves performance on data prior to the LLM’s knowledge cutoff, but provides no advantage after the cutoff. This bias is strong enough that regularization of prompt instructions cannot fully address this form of overfitting. We further show that the bias can arise from users’ unintentional conversational context that hints at the purpose. Overall, we document that AI bias due to “seeing the goal” is not an algorithmic flaw, but stems from human accountability in research design.

JEL-codes: G14 G17 (search for similar items in EconPapers)
Date: 2026-04
Note: AP
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