Institutional Affiliation: University of California San Diego
|How do Humans Interact with Algorithms? Experimental Evidence from Health Insurance|
with , : w25976
Algorithms are increasingly available to help consumers make purchasing decisions. How does algorithmic advice affect human decisions and what types of consumers are likely to use such advice? We conducted a randomized, controlled trial comparing the effects of offering personalized information, either with or without algorithmic expert recommendations, relative to offering no personalized information for consumers choosing prescription drug insurance plans. Treated consumers were more likely to switch plans and to choose a plan that lowered their total spending on drugs. The behavioral response was more pronounced when information was combined with an algorithmic expert recommendation. We develop an empirical model of consumer choice to examine the mechanisms by which expert recommendatio...