Generative artificial intelligence and evaluating strategic decisions

Post Views: 19

Abstract

Research Summary

Strategic decisions are uncertain and often irreversible. Hence, predicting the value of alternatives is important for strategic decision making. We investigate the use of generative artificial intelligence (AI) in evaluating strategic alternatives using business models generated by AI (study 1) or submitted to a competition (study 2). Each study uses a sample of 60 business models and examines agreement in business model rankings made by large language models (LLMs) and those by human experts. We consider multiple LLMs, assumed LLM roles, and prompts. We find that generative AI often produces evaluations that are inconsistent and biased. However, when aggregating evaluations, AI rankings tend to resemble those of human experts. This study highlights the value of generative AI in strategic decision making by providing predictions.

Managerial Summary

Managers are seeking to create value by integrating generative AI into their organizations. We show how managers can use generative AI to help evaluate strategic decisions. Generative AI’s single evaluations are often inconsistent or biased. However, if managers aggregate many evaluations across LLMs, prompts, or roles, the results show that the resulting evaluations tend to resemble those of human experts. This approach allows managers to obtain insight on strategic decisions across a variety of domains with relatively low investments in time or resources, which can be combined with human inputs.

Abstract

Research Summary

Managerial Summary

Related Posts

Justice, jealousy and performance: Evidence from neo-feudal Pakistan

What out-of-body experiences may tell us about the mind beyond the brain

Digital transformation and firms’ bargaining power: Evidence from China