The Broken Leg of Algorithm Appreciation: An Experimental Study on the Effect of Unobserved Variables on Advice Utilization

Despite the widespread use of machine learning algorithms, their effectiveness is limited by a phenomenon known as algorithm aversion. Recent research concluded that unobserved variables can cause algorithm aversion. However, the impact of an unobserved variable on algorithm aversion remains unclear. Previous studies focused on situations where humans had more variables available than algorithms. We extend this research by conducting an online experiment with 94 participants, systematically varying the number of observable variables to the advisor and the advisor type. Surprisingly, our results did not confirm that an unobserved variable had a negative effect on advice-taking. Instead, we found a positive impact in an algorithm appreciation scenario. This study provides new insights into the paradoxical behavior in which people weigh advice more despite having fewer variables, as they correct for the advisor's errors. Practitioners should consider this behavior when designing algorithms and account for user correction behavior.