Algorithm aversion? On the influence of advice accuracy on trust in algorithmic advice

Abstract

ABSTRACT There is empirical evidence that decision makers show negative behaviours towards algorithmic advice compared to human advice, termed as algorithm aversion. Taking a trust theoretical perspective, this study broadens the quite monolithic view on behaviour to its cognitive antecedent: cognitive trust, i.e. trusting beliefs and trusting intentions. We examine initial trust (cognitive trust and behaviour) as well as its development after performance feedback by conducting an online experiment that asked participants to forecast the expected demand for a product. Advice accuracy was manipulated by ± 5 % relative to the participant’s initial forecasting accuracy determined in a pre-test. Results show that initial behaviour towards algorithmic advice is not influenced by cognitive trust. Furthermore, the decision maker’s initial forecasting accuracy indicates a threshold between near-perfect and bad advice. When advice accuracy is at this threshold, we observe behavioural algorithm appreciation, particularly due to higher trusting integrity beliefs in algorithmic advice.