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Has machine learning rendered simple rules obsolete?

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  • Jesús Fernández-Villaverde

    (University of Pennsylvania)

Abstract

Epstein (Simple rules for a complex world, Harvard University Press, Cambridge, 1995) defended the superiority of simple legal rules over complex, human-designed regulations. Has Epstein’s case for simple rules become obsolete with the arrival of artificial intelligence, and in particular machine learning (ML)? Can ML deliver better algorithmic rules than traditional simple legal rules? This paper argues that the answer to these question is “no” by building an argument based on three increasingly more serious barriers that ML faces to develop legal (or quasi-legal) algorithmic rules: data availability, the Lucas’ critique, and incentive compatibility in eliciting information. Thus, the case for simple legal rules is still sound even in a world with ML.

Suggested Citation

  • Jesús Fernández-Villaverde, 2021. "Has machine learning rendered simple rules obsolete?," European Journal of Law and Economics, Springer, vol. 52(2), pages 251-265, December.
    • Handle: RePEc:kap:ejlwec:v:52:y:2021:i:2:d:10.1007_s10657-021-09690-w
    DOI: 10.1007/s10657-021-09690-w
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    More about this item

    Keywords

    Artificial intelligence; Machine learning; Economics; Simple rules;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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