Using AI, the Ultimate Black Box, Effectively—A Management Decision Making Perspective

Artificial Intelligence (AI) has great promise, but an arguably greater downside, depending on your perspective. In this article, we answer three key questions from a management decision making perspective: What is AI? How does AI work? How can managers use AI to improve the quality of their decisions? Specifically, we focus on the importance of transparency in science and decision making versus the black box nature of AI, describe the pros and cons of four types of models used for management decision making (decision support systems, data analytics, traditional AI, and generative AI), identify the crucial role of decision makers in the interpretation and validation of AI output, discuss ethical issues associated with AI, develop a method for gauging the quality of management decisions based on AI (the AI Decision Quality Index), and suggest guidelines to help managers using AI make good decisions.