This study uses an artificial intelligence (AI) model to identify arbitrage opportunities in the retail marketplace. Specifically, we develop an AI model to predict the optimal purchasing point based on the price movement of products in the market. Our model is trained on a large dataset collected from an online marketplace in the United States. Our model is enhanced by incorporating user-generated content (UGC), which is empirically proven to be significantly informative. Overall, the AI model attains more than 90% precision (...) rate, while the recall rate is higher than 80% in an out-of-sample test. In addition, we conduct a field experiment to verify the external validity of the AI model in a real-life setting. Our model identifies 293 arbitrage opportunities during a one-year field experiment and generates a profit of $7.06 per arbitrage opportunity. The result demonstrates that AI performs exceptionally well in identifying arbitrage opportunities in retail markets with tangible economic values. Our results also yield important implications regarding the role of AI in the society, both from the consumer and firm perspectives. (shrink)

Artificial intelligence (AI)-based virtual influencers are now frequently used by brands in various categories to engage customers. However, little is known about who the followers of these AI-based virtual influencers are and more importantly, what drives the followers to use AI-based virtual influencers. The results from a survey support the notion that compensatory mechanisms and the need to belong play important roles in affecting usage intentions of AI-based virtual influencers. Specifically, the study finds that usage intentions are mediated and moderated (...) by compensatory mechanisms that arise from the perception of AI-based virtual influencers’ functional benefits and existential threats to human identity. Furthermore, the need for belonging moderates the effects of the following status (following versus non-following) on perceived personalization benefits of AI-based virtual influencers and behavioral intentions to use AI-based virtual influencers. This study provides important implications for academia delving into the social, cultural, and philosophical implications of AI-based virtual influencers for human societies as well as for brands that plan to use AI-based virtual influencers and gain a better understanding of their customers in AI-driven digital marketing. (shrink)

Public entities around the world are increasingly deploying artificial intelligence and algorithmic decision-making systems to provide public services or to use their enforcement powers. The rationale for the public sector to use these systems is similar to private sector: increase efficiency and speed of transactions and lower the costs. However, public entities are first and foremost established to meet the needs of the members of society and protect the safety, fundamental rights, and wellbeing of those they serve. Currently AI systems (...) are deployed by the public sector at various administrative levels without robust due diligence, monitoring, or transparency. This paper critically maps out the challenges in procurement of AI systems by public entities and the long-term implications necessitating AI-specific procurement guidelines and processes. This dual-prong exploration includes the new complexities and risks introduced by AI systems, and the institutional capabilities impacting the decision-making process. AI-specific public procurement guidelines are urgently needed to protect fundamental rights and due process. (shrink)

Although related studies have examined the impact of different images of artificial intelligence products on consumer evaluation, exploring the impact on consumer purchase decisions from the perspective of algorithmic decision autonomy remains under-explored. Based on the self-determination theory, this research discusses the influence of the agent decision-making role played by different AI algorithmic decision autonomy on consumer purchase decisions. The results of the 3 studies indicate that algorithmic decision autonomy has an inverted U-shaped effect on consumer’s purchase decisions, consumer’s self-efficacy (...) mediates the relationship between algorithmic decision autonomy and purchase decisions, and consumer’s power distance moderates the relationship between algorithmic decision autonomy, self-efficacy, and purchase decisions. The research results can provide references for marketers, retailers, algorithm designers, and other parties to formulate algorithm marketing strategies, make AI algorithm decisions better serve consumers, and achieve value co-creation with consumers. (shrink)