Microeconomic Theory Seminar

Speaker: Rustamdjan Hakimov (Lausanne)

Title: Behavioral measures improve AI hiring: A field experiment

Format: Hybrid

Homepage: Rustamdjan Hakimov homepage

 

Organiser: Changhwa

Abstract: The adoption of Artificial Intelligence (AI) for hiring processes is often impeded by a scarcity of comprehensive employee data. We hypothesize that the inclusion of behavioral measures elicited from applicants can enhance the predictive accuracy of AI in hiring. We study this hypothesis in the context of microfinance credit officers. Our findings suggest that survey-based behavioral measures markedly improve the predictions of a random-forest algorithm trained to predict productivity within sample relative to demographic information alone. We then validate the algorithm’s robustness to the selectivity of the training sample and potential strategic responses by applicants by running two out-of-sample tests: one forecasting the future performance of novice employees, and another by a field experiment on hiring. Both tests corroborate the effectiveness of incorporating behavioral data to predict performance. At the same time, our field experiment comparing workers hired by the algorithm with those hired by human managers did not reveal significant treatment effects.