Aug 2026· Human Capital Leadership Review· Vol 37· 0 citations
TL;DR
The findings suggest that AI functions optimally as a bounded computational tool rather than as a rationality substitute, and that organizations treating algorithmic outputs as inherently superior judgment systematically compromise their institutional intelligence.
Abstract
Organizations increasingly adopt artificial intelligence systems under the assumption that computational efficiency, data-driven consistency, and predictive accuracy translate into superior decision-making. This article challenges that assumption by examining how algorithmic decision systems systematically erode organizational rationality even as they enhance certain computational capabilities. Drawing on bounded rationality theory and extensive empirical research across healthcare, criminal justice, human resources, and public administration, the analysis identifies four interconnected mechanisms through which AI diminishes decision quality: metric displacement (optimizing measurable proxies rather than authentic objectives), cognitive compression (narrowing human judgment around algorithmic defaults), contextual erasure (eliminating situational particularity essential to sound judgment), and reflexive capacity atrophy (suppressing organizations' ability to question their own premises). These mechanisms produce cascading institutional consequences including accountability diffusion, contestability reduction, and adaptive learning deterioration. The findings suggest that AI functions optimally as a bounded computational tool rather than as a rationality substitute, and that organizations treating algorithmic outputs as inherently superior judgment systematically compromise their institutional intelligence.
This paper reconceptualizes managerial rationality in artificial intelligence (AI)-augmented decision-making through the notion of algorithmic-bounded rationality (ABR). It argues that AI does not remove boundedness but relocates it into algorithmic constraints related to data volatility, model opacity and governance maturity.
Building on bounded rationality and socio-technical systems theory, this conceptual study develops an ABR framework linking three decision modes (AI-led, human-first and collaborative) to mechanisms of algorithmic boundedness. The framework is further extended through propositions on mode–task fit and governance conditions for sustaining hybrid decision architectures.
The analysis shows that human–AI collaboration represents a distinct rationality configuration rather than a midpoint between automation and human judgment. Under ABR, each decision mode becomes effective under different combinations of data intensity, contextual ambiguity and accountability demands.
Managers should treat AI integration as a redesign of decision governance rather than a technological upgrade, emphasizing appropriate authority allocation and oversight mechanisms.
The study reframes rationality in the AI era by showing how boundedness shifts from human cognition to socio-technical decision infrastructures. It contributes a mechanism-based framework linking decision modes, task conditions and governance arrangements in AI-augmented decision systems.
Institutional artificial intelligence (AI) decision-support systems progressively evaluate cases, determine eligibility, and allocate resources; yet, predicted efficacy alone does not guarantee equity, contestability, or responsible utilization. Current research frequently considers fairness measures, explainability, human oversight, and organizational governance as rather distinct issues. This paper presents a traceable bias-auditing framework that amalgamates prediction, explanation, selective human review, and structured recording into a cohesive operational decision pathway. Through design science research, the artifact was exhibited in a controlled proof-of-concept utilizing 8000 synthetic institutional situations and historically biased data labels. The foundational classifier was a logistic regression model. Selective escalation is initiated by the proximity of boundaries, tension in explanation patterns, and the rules governing review priorities. Three situations were evaluated: baseline prediction, prediction with explanation alone, and comprehensive architecture with review and audit recording. Explanations enhanced reviewability but did not significantly alter fairness outcomes. The proposed architecture improved F1 from 0.781 to 0.795, reduced the demographic parity gap from 0.070 to 0.010, decreased the equal opportunity gap from 0.116 to 0.036, and improved audit completeness from 0.33 to 1.00, while escalating only 4.8% of cases for human review. The results indicate that explanations attain institutional significance solely when linked to procedural regulations and enduring records. The evaluation was simulation-based; thus, the results should be interpreted as proof-of-concept evidence rather than direct field validation.
Research indicates that proper application of MCDM techniques can relate AI outputs to real-life decision-making by structuring, enforcing transparency, and justifying AI-scoring results for use within an MCDA (Multi-Criteria Decision Analysis) framework, as demonstrated in complex use cases such as transportation planning.
Karzan Ismael, Ali Mohammed Salih, Zryan Najat Rashid· Knowledge and Decision Syste...· 0 citations
The article demonstrates how labour markets and migration governance function as "stress-test" domains in which continuous classification, automated risk assessment, worker scoring, and fragmented data environments can amplify existing structural inequalities.
A. Sinchev, Svetlana Bekmambetova· Work· 0 citations
The accelerating integration of AI into the labor market is transforming the foundational dynamics of modern work, particularly through the rise of remote work and the expansion of the gig economy. Freelance platforms increasingly rely on algorithmic management systems that automate task allocation, performance monitoring, and disciplinary decisions. While these systems promise substantial productivity gains, they also introduce new challenges, including heightened information asymmetry and reduced transparency for workers who often lack mechanisms to contest automated outcomes. This disconnect has significant implications for worker well‑being, especially as critical human–resource functions become fully automated. This study proposes a methodological framework to leverage AI — specifically Natural Language Understanding — to support more transparent and equitable managerial decision making without compromising platform efficiency. Unlike conventional HR literature that assumes human involvement in conflict resolution, freelancers frequently encounter automated decisions that overlook nuanced indicators of distress. By incorporating computational techniques capable of detecting linguistic signals associated with emotional strain, this research addresses a critical gap in understanding how algorithmic systems can be designed to better account for human well‑being. The study develops an empirically grounded infrastructure for processing unstructured worker generated text, integrating sentiment analysis through the “Valence Aware Dictionary and Sentiment Reasoner” model and discourse interpretation via a discourse relation classifier trained on the Penn Discourse Treebank. Forming a departure point to enable automated sensitivity analysis of worker feedback by discovering a strong indicator out of discourse relation type categories is the sole artefact of the research that could lead towards the proof of concept about automated sensitivity analysis of worker feedback to sustain a scalable pathway toward human centered algorithmic management.
Artificial intelligence is increasingly promoted as a tool for modernizing public administration, accelerating decision-making, improving public services, and reducing administrative costs. Yet, in heterogeneous Global South contexts shaped by structural inequality, technological dependency, unequal access to digital infrastructure, and uneven institutional capacity, algorithmic efficiency may also generate new forms of democratic exclusion. This article develops a normative conceptual analysis of AI governance and argues that public uses of AI should not be evaluated primarily through technical efficiency, ethical compliance, or procedural safeguards, but through democratic legitimacy. It proposes the concept of democratic algorithmic legitimacy, understood as a relational property of the sociotechnical and institutional arrangements through which public authority is exercised with the support of AI. Such arrangements are legitimate when their purposes and operation can be publicly justified to affected persons, when those persons have meaningful opportunities to influence and contest their use, and when responsible institutions retain the authority and capacity to review decisions, repair unjustified harms, modify systems, suspend their operation, or withdraw them when necessary. The framework operationalizes this standard through seven interdependent dimensions: transparency, participation, inclusion, accountability, contestability, correctability, and social justice. This conceptual architecture distinguishes technical performance from democratic authority and explains why efficient outcomes cannot compensate automatically for exclusion, opacity, weak accountability, inaccessible contestation, or ineffective correction. The article identifies interconnected structural, institutional, social, and democratic risks associated with AI deployment in unequal sociotechnical environments and outlines a governance agenda based on meaningful public participation, democratic impact assessment, independent scrutiny, institutional guarantees of explanation, review and appeal, protection of affected groups, public control, technological capacity, and context-sensitive regulation. The article concludes that AI governance should be assessed not only by what computational systems optimize, but by whether societies retain the democratic authority to shape, question, supervise, correct, and, when necessary, reject their use.
A. Duche-Pérez, Marco Tulio Falconí Picardo, Emmanuel Neptalí Augusto Chávez Urquizo et al.· Frontiers in Political Scien...· 0 citations
We use cookies to run the site and, with your consent, for analytics and to show ads.
See our Cookie Policy.
