More and more companies are leveraging technological advances in machine learning, natural language processing, and other forms of artificial intelligence to provide relevant and instant recommendations to consumers. From Amazon to Netflix to REX Real Estate, firms are using AI recommenders to enhance the customer experience. AI recommenders are also increasingly used in the public sector to guide people to essential services. For example, the New York City Department of Social Services uses AI to give citizens recommendations on disability benefits, food assistance, and health insurance.
However, simply offering AI assistance won’t necessarily lead to more successful transactions. In fact, there are cases when AI’s suggestions and recommendations are helpful and cases when they might be detrimental. When do consumers trust the word of a machine, and when do they resist it? Our research suggests that the key factor is whether consumers are focused on the functional and practical aspects of a product (its utilitarian value) or focused on the experiential and sensory aspects of a product (its hedonic value).
In an article in the Journal of Marketing — based on data from over 3,000 people who took part in 10 experiments — we provide evidence supporting for what we call a word-of-machine effect: the circumstances in which people prefer AI recommenders to human ones.
The word-of-machine effect.
The word-of-machine effect stems from a widespread belief that AI systems are more competent than humans in dispensing advice when utilitarian qualities are desired and are less competent when the hedonic qualities are desired. Importantly, the word-of-machine effect is based on a lay belief that does not necessarily correspond to the reality. The fact of the matter is humans are not necessarily less competent than AI at assessing and evaluating utilitarian attributes. Vice versa, AI is not necessarily less competent than humans at assessing and evaluating hedonic attributes. Indeed, AI selects flower arrangements for 1-800-Flowers and creates new flavors for food companies such as McCormick.