Experts predict that artificial intelligence can contribute up to $15.7 trillion to the global economy by the end of 2030. AI has become an integral part of everyone’s lives. From cars to phones, AI has unprecedentedly transformed technology and does so rapidly. However, algorithmic bias is considered a major concern. It generates discriminatory results against a specific category of individuals, generally minorities and women. Such discrimination can worsen social inequality and adversely affect any organization. In their article for Harvard Business Review, Shunyuan Zhang, Kannan Srinivasan, Param Vir Singh, and Nitin Mehta share their insights about AI and how it can reduce inequity in companies.
Algorithms and Adoptions
Algorithms can generate biased results to a certain extent, but the final deployment does not entirely rely on them. Enterprises and customers play an integral role in determining algorithms’ results, and this correlation is often neglected. Experts believe that algorithms must deploy market approximations. It should evaluate the facts such as who/what and to what degree algorithms will impact the business and end-users.
Airbnb’s Smart Pricing Algorithm
Airbnb recently launched an AI algorithm-based innovative pricing tool that adjusts a daily listing price on its own. The algorithm was supposed to provide Airbnb hosts an idea of the neighborhood price and market strategies to better understand the price of their property and how to efficiently analyze the market. However, after the launch of the algorithm, the significantly wide racial revenue gap was considerably reduced. The price reduction was seemingly alike for the white and black hosts, but the number of bookings for black hosts increased significantly. The ‘color blind’ algorithm effectively improved financial benefits for both races and yielded social benefits by alleviating the racial revenue gap.
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