Thumbs Up or Down: Consumer Reactions to Decisions by Algorithms Versus Humans

Abstract

Although companies increasingly are adopting algorithms for consumer-facing tasks (e.g., application evaluations), little research has compared consumers’ reactions to favorable decisions (e.g., acceptances) versus unfavorable decisions (e.g., rejections) about themselves that are made by an algorithm versus a human. Ten studies reveal that, in contrast to managers’ predictions, consumers react less positively when a favorable decision is made by an algorithmic (vs. a human) decision maker, whereas this difference is mitigated for an unfavorable decision. The effect is driven by distinct attribution processes: it is easier for consumers to internalize a favorable decision outcome that is rendered by a human than by an algorithm, but it is easy to externalize an unfavorable decision outcome regardless of the decision maker type. The authors conclude by advising managers on how to limit the likelihood of less positive reactions toward algorithmic (vs. human) acceptances.