Training AI for When Humans Will Use It

Kevin Bryan and Joshua Gans

No 35490, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: AI predicts; humans use its predictions to make decisions. These predictions are combined with human verification and analysis, queries to other statistical models, and so on. The economic value of an AI, therefore, depends on how it interacts with the surrounding decision environment. We describe the value of AI as part of this "composite experiment" where AI makes a coarse prediction of the state of the world, show what this means for optimal model training via a geometric argument, explain why optimal training can be discontinuous in economic variables, and study how heterogeneous users or monopoly model trainers affect these results. In particular, maximizing the unconditional accuracy of AI predictions is generally suboptimal.

JEL-codes: D81 D82 D83 O33 (search for similar items in EconPapers)
Date: 2026-07
Note: IO PR
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