NBER

Ming Tai-Seale

School of Medicine, Family Medicine and Public Hea
University of California San Diego
9500 Gilman Dr
La Jolla, CA 92093

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: University of California San Diego

NBER Working Papers and Publications

June 2019How do Humans Interact with Algorithms? Experimental Evidence from Health Insurance
with Kate Bundorf, Maria Polyakova: 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...

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