The Impact of Functional and Psychological Barriers on Algorithm Aversion – An IRT Perspective

Abstract

The application of artificial intelligence (AI) in decision-making is regarded as the most impactful disruption in an organization’s digitalization. However, the benefits of the algorithmic decision can be leveraged only if the managers of an organization adopt this technology. Research found that despite the superior performance of algorithms, people discount algorithmic decisions either deliberately or unintentionally, a phenomenon known as algorithm aversion. In this regard, the current study seeks to investigate whether managers’ innovation resistance, measured by different barriers, has any impact on algorithm aversion. Analyzing the survey data of 167 bank/financial managers, we found that while value barriers, tradition barriers, and image barriers are significantly associated with algorithm aversion, such relationships are absent in the case of usage barriers and risk barriers. The findings of this study have several theoretical and practical implications.