How Should Artificial Intelligence Explain Itself? Understanding Preferences for Explanations Generated by XAI Algorithms

Explaining firm decisions made by algorithms in customer-facing applications is increasingly required by regulators and expected by customers. While the emerging field of Explainable Artificial Intelligence (XAI) has mainly focused on developing algorithms that generate such explanations, there has not yet been sufficient consideration of customers’ preferences for various types and formats of explanations. We discuss theoretically and study empirically people’s preferences for explanations of algorithmic decisions. We focus on three main attributes that describe automatically-generated explanations from existing XAI algorithms (format, complexity, and specificity), and capture differences across contexts (online targeted advertising vs. loan applications) as well as heterogeneity in users’ cognitive styles. Despite their popularity among academics, we find that counterfactual explanations are not popular among users, unless they follow a negative outcome (e.g., loan application was denied). We also find that users are willing to tolerate some complexity in explanations. Finally, our results suggest that preferences for specific (vs. more abstract) explanations are related to the level at which the decision is construed by the user, and to the deliberateness of the user’s cognitive style