Has Machine Learning Rendered Simple Rules Obsolete?

Jesus Fernandez-Villaverde

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: Epstein (1995) defended the superiority of simple legal rules over complex, human-designed regulations. Has Epstein’s case for simple rules become obsolete with the arrival of arti?cial intelligence, and in particular machine learning (ML)? Can ML de-liver better algorithmic rules than traditional simple legal rules? This paper argues that the answer to these question is “no.” I will build an argument based on three increasingly more serious barriers that ML faces to develop legal (or quasi-legal) algorithmic rules: data availability, the Lucas’ critique, and incentive compatibility in eliciting information. Thus, the case for simple legal rules is still sound even in a world with ML.

Keywords: Arti?cial intelligence; machine learning; economics; simple rules (search for similar items in EconPapers)
JEL-codes: D85 H10 H30 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2021-01-06
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