Machine Learning and Human Capital: Experimental Evidence on Productivity Complementarities

Abstract

The use of machine learning (ML) for productivity in the knowledge economy requires considerations of important biases that may arise from ML predictions. We define a new source of bias related to incompleteness in real time inputs, which may result from strategic behavior by agents. We theorize that domain expertise of users can complement ML by mitigating this bias. Our observational and experimental analyses in the patent examination context support this conjecture. In the face of “input incompleteness,” we find ML is biased towards finding prior art textually similar to focal claims and domain expertise is needed to find the most relevant prior art. We also document the importance of vintage-specific skills, and discuss the implications for artificial intelligence and strategic management of human capital.