Regulating Artificial Intelligence

Pedro Teles, João Guerreiro and Sérgio Rebelo

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: We consider an environment in which there is substantial uncertainty about the potential adverse external effects of AI algorithms. We find that subjecting algorithm implementation to regulatory approval or mandating testing is insufficient to implement the social optimum. When testing costs are low, a combination of mandatory testing for external effects and making developers liable for the adverse external effects of their algorithms comes close to implementing the social optimum even when developers have limited liability.

Date: 2023
New Economics Papers: this item is included in nep-ain, nep-mic and nep-reg
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Working Paper: Regulating Artificial Intelligence (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w202319

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