By Rachel Cholewinski, Marketing Team, IPC
We are all guilty of letting our bias cloud our judgment whether we are conscious of their effects or not. Businesses are not immune from the veil of bias, which can result in missed opportunities and serious inefficiencies. AI has the potential to help us avoid bias in hiring, operations, customer service, and the broader business and social communities (“How Can AI End Bias”, 2017).
Philosopher John Rawls suggests that we should view the world behind a veil of ignorance that prevents us from knowing who we are and identifying with our own personal biases (“Veil of Ignorance”, 2018). By viewing our society from behind a “veil” we can become removed from our own personal biases and past experiences. Ultimately, this results in objectively seeing how society, or in this case business, should operate effectively and fairly. According to Rawls’ theory, putting up a veil and looking past our own biases can help us fairly decide how the rules and functionalities within our society should be structured.
Artificial Intelligence can act as a modern veil in our society. Unlike humans, AI can potentially reduce pre-assumptions and biases by analyzing given data inputs with algorithms. In comparison, AI can lessen human emotions and prejudices that can develop from past experiences, allowing the computer to make the most objective business decision.
3 ways AI can lessen biases in businesses:
- Companies have begun using AI as a tool during the hiring process to help their HR departments try to avoid bias that can often eliminate otherwise very qualified employees. According to Forbes, “In 2018, I [Randy Block] believe we will see more intangibles/soft skills being assessed along with a psychological profile using some form of AI as a screen. The caveat here is the algorithms being developed for this new tool need to be fair and ethical. Put another way, hiring bias (e.g., gender, race, age) can be minimized using AI.” By reducing bias AI can distinguish the most qualified candidate for the position resulting in long term success of that worker and the business.
- Additionally, if you engage in an investment decision that goes poorly, you may develop a negative bias towards that investment strategy and shy away from it in the future. However, what if we are blinded by this bias that we miss future opportunities to make profitable investments? AI also has the potential to lessen human emotion and bias in financial investment decisions. According to FinTech Futures, “Even the most seasoned analyst is not capable of detecting all forms of sentiment that foreshadow market movements, but machines can.” By minimizing the human thought process of a historically bad investment, AI can focus on the data and algorithms that are presented and therefore provide a better outcome.
- Similarly, in retail banking AI is being used to make financial investment suggestions for new customers. According to FinTech Futures, “Now, robo-advisors collect information about an investor’s financial goals and the level of risk they’re willing to incur, then they input this data into algorithms.” A robo-advisor generates a ‘risk profile’ for an individual, which was previously done by a human advisor asking the customers a series of financially based questions. It also offers appropriate financial advice based on the data collected and as a result the client is able to make educated decisions without fear of judgment or embarrassment.
According to a Portfolio Manager at a New York Hedge Fund “Although this is a very exciting concept there is a lot more that still has to be developed within AI to fully rely on this data in the institutional banking sector.”
With cutting edge technology may come risk.
One of the risks of using AI is that the cost of constantly updating the programming may exceed the benefits. As the same Portfolio Manager above mentioned, “In finance the inputs and features that the computers are learning can change in a day, weeks or a month.”
Setting aside the very serious challenges with keeping AI up to date on the latest market trends and data, the individuals inputting the algorithms could have their own bias or simply make mistakes. In spite of the inroads made by AI, human input and intelligence will continue to be critical and relevant in the design on algorithms. The programmers deciding the criteria that the computer will judge upon are potentially including their very own bias into the coding.
AI cannot yet fully guarantee unbiased decisions but these advancements are the first steps in lessening them. AI was once a distant concept that has now integrated itself into our everyday lives. With continuing investment in AI technology it can become a reliable tool within the hiring process, investments decisions, customer service and more. Although the veil of ignorance may only be a theory, AI can potentially make it a reality.
© 2018 IPC Systems, Inc. All Rights Reserved. The contents of this publication are intended for general information purposes only and should not be construed as legal or regulatory advice.