The Algorithm Discount: Explaining Consumers’ Valuation of Human- versus Algorithm-Created Digital Products

Owing to advances in generative artificial intelligence (AI), machines can now create digital products like software applications or media content, evoking calls to label such products as “AI-made.” Research on the handmade effect and algorithm aversion suggests that consumers react negatively to digital products that have been created by generative AI systems instead of humans. It is unclear why consumers show this reaction, which we refer to as “algorithm discount.” To answer this question, we conducted a mixed-methods study in the context of digital news offerings, comprising 41 qualitative interviews and a choice-based conjoint analysis with 421 respondents. The results show that consumers’ beliefs about the love and effort imbued in the product, their curiosity about algorithmically generated products, and specific product characteristics, such as the type of news article, determine the algorithm discount. These findings extend our understanding of the emergence of consumers’ aversion to algorithm-created products and offer providers of such products insight into potential countermeasures.

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Publication Details

Journal
Journal of Management Information Systems
Published
2025-04-03
DOI
https://doi.org/10.1080/07421222.2025.2487308
Citations
5
Primary Topic
Blockchain Technology Applications and Security
Type
article
Field-Weighted Citation Impact
16.23
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article

The Algorithm Discount: Explaining Consumers’ Valuation of Human- versus Algorithm-Created Digital Products

Thomas Heß, Jennifer Rix, Christine Rzepka, Benedikt Berger
5 citations
Journal of Management Information Systems
Blockchain Technology Applications and Security
16.23
article

The Algorithm Discount: Explaining Consumers’ Valuation of Human- versus Algorithm-Created Digital Products

Thomas Heß, Jennifer Rix, Christine Rzepka, Benedikt Berger
article en
5 citations

Abstract

Owing to advances in generative artificial intelligence (AI), machines can now create digital products like software applications or media content, evoking calls to label such products as “AI-made.” Research on the handmade effect and algorithm aversion suggests that consumers react negatively to digital products that have been created by generative AI systems instead of humans. It is unclear why consumers show this reaction, which we refer to as “algorithm discount.” To answer this question, we conducted a mixed-methods study in the context of digital news offerings, comprising 41 qualitative interviews and a choice-based conjoint analysis with 421 respondents. The results show that consumers’ beliefs about the love and effort imbued in the product, their curiosity about algorithmically generated products, and specific product characteristics, such as the type of news article, determine the algorithm discount. These findings extend our understanding of the emergence of consumers’ aversion to algorithm-created products and offer providers of such products insight into potential countermeasures.

Journal of Management Information SystemsVol. 42(2)
University of Münster (DE), Ludwig-Maximilians-Universität München (DE)
Openalex Percentile: Top 1%
Blockchain Technology Applications and Security
16.23
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