Algorithmic monoculture and social welfare

Significance Algorithmic monoculture is a growing concern in the use of algorithms for high-stakes screening decisions in areas such as employment and lending. If many firms use the same algorithm, even if it is more accurate than the alternatives, the resulting “monoculture” may be susceptible to correlated failures, much as a monocultural system is in biological settings. To investigate this concern, we develop a model of selection under monoculture. We find that even without any assumption of shocks or correlated failures—i.e., under “normal operations”—the quality of decisions may decrease when multiple firms use the same algorithm. Thus, the introduction of a more accurate algorithm may decrease social welfare—a kind of “Braess’ paradox” for algorithmic decision-making. As algorithms are increasingly applied to screen applicants for high-stakes decisions in employment, lending, and other domains, concerns have been raised about the effects of algorithmic monoculture, in which many decision-makers all rely on the same algorithm. This concern invokes analogies to agriculture, where a monocultural system runs the risk of severe harm from unexpected shocks. Here, we show that the dangers of algorithmic monoculture run much deeper, in that monocultural convergence on a single algorithm by a group of decision-making agents, even when the algorithm is more accurate for any one agent in isolation, can reduce the overall quality of the decisions being made by the full collection of agents. Unexpected shocks are therefore not needed to expose the risks of monoculture; it can hurt accuracy even under “normal” operations and even for algorithms that are more accurate when used by only a single decision-maker. Our results rely on minimal assumptions and involve the development of a probabilistic framework for analyzing systems that use multiple noisy estimates of a set of alternatives.