MICRO/THEORY: Natural Selection of Artificial Intelligence; Professor Balázs Szentes (London School of Economics)

Abstract

We study the AI control problem in the context of decentralized economic production. Profit-maximizing firms employ artificial intelligence to automate aspects of production. This creates a feedback loop whereby AI is instrumental in the production and promotion of AI itself. Just as with natural selection of organic species this introduces a new threat whereby machines programmed to distort production in favor of machines can displace those machines aligned with efficient production. We examine the extent to which competitive market forces can serve their traditional efficiency-aligning role in the face of this new threat. Our analysis highlights the crucial role of AI transparency. When AI systems lack perfect transparency self-promoting machines destablize any efficient allocation. The only stable competitive equilibrium distorts consumption down to catastrophic levels.

Click here to view paper.