When Artificial Intelligence Meets Behavioural Economics

Abstract

Behavioural economics has its roots in the problems of rationality and optimising the expected utility, specially the empirical evidence of individuals acting against expected norms. Artificial intelligence (AI), on the other hand, is premised on the dominant idea being that because of the dispositional factors, the human being often might be akin to a disturbance to an otherwise smooth system. Thus, the intersection of both these areas is decision-making under uncertainty. Both these concepts put together have interesting implications for organisations. This article explores the impact of AI and Behavioural Economics on the human resources (HR) function of an organisation. Some of the contemporary applications of AI augmenting decision-making have been presented using the lens of the HR Value Chain. Based on these applications, implications for organisations are discussed. Despite limitations, AI, as a technology, is soon going to be embraced by the firms, leading to hybrid organisations. As a result, organisations need to redesign their processes and policies.