Coase-Sandor Working Paper Series in Law and Economics
Artificial intelligence (AI), and machine learning in particular, promises lawmakers greater specificity and fewer errors. Algorithmic lawmaking and judging will leverage models built from large stores of data that permit the creation and application of finely tuned rules. AI is therefore regarded as something that will bring about a movement from standards to rules. Drawing on contemporary data science, this Article shows that machine learning is less impressive when the past is unlike the future, as it is whenever new variables appear over time. In the absence of regularities, machine learning loses its advantage and, as a result, looser standards can become superior to rules. We apply this insight to bail and sentencing decisions, as well as familiar corporate and contract law rules. More generally, we show that a Human-AI combination can be superior to AI acting alone. Just as today’s judges overrule errors and outmoded precedent, tomorrow’s lawmakers will sensibly overrule AI in legal domains where the challenges of measurement are present. When measurement is straightforward and prediction is accurate, rules will prevail. When empirical limitations such as overfit, Simpson’s Paradox, and omitted variables make measurement difficult, AI should be trusted less and law should give way to standards.
Frank Fagan and Saul Levmore, "The Impact of Artificial Intelligence on Rules, Standards, and Judicial Discretion", Coase-Sandor Working Paper Series in Law and Economics, No. 876 (2019).