# When Life Gives You AI, Will You Turn It Into A Market for Lemons? Understanding How Information Asymmetries About AI System Capabilities Affect Market Outcomes and Adoption

arXiv: https://arxiv.org/abs/2601.21650 · HTML: https://mlsanity.com/paper/2601.21650/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Builds on 50 of its 157 references that are in the map.
- First posted on arXiv 29 Jan 2026.

## Builds on (most cited first, 30 of 50)

- [Towards A Rigorous Science of Interpretable Machine Learning](https://mlsanity.com/paper/1702.08608/) (2017)
- [Datasheets for Datasets](https://mlsanity.com/paper/1803.09010/) (2018)
- [Explanation in Artificial Intelligence: Insights from the Social Sciences](https://mlsanity.com/paper/1706.07269/) (2017)
- [Model Cards for Model Reporting](https://mlsanity.com/paper/1810.03993/) (2018)
- [Beyond Accuracy: Behavioral Testing of NLP models with CheckList](https://mlsanity.com/paper/2005.04118/) (2020)
- [Closing the AI Accountability Gap: Defining an End-to-End Framework for Internal Algorithmic Auditing](https://mlsanity.com/paper/2001.00973/) (2020)
- [Effect of Confidence and Explanation on Accuracy and Trust Calibration in AI-Assisted Decision Making](https://mlsanity.com/paper/2001.02114/) (2020)
- [Manipulating and Measuring Model Interpretability](https://mlsanity.com/paper/1802.07810/) (2018)
- [Data-centric Artificial Intelligence: A Survey](https://mlsanity.com/paper/2303.10158/) (2023)
- [Formalizing Trust in Artificial Intelligence: Prerequisites, Causes and Goals of Human Trust in AI](https://mlsanity.com/paper/2010.07487/) (2020)
- [On Human Predictions with Explanations and Predictions of Machine Learning Models: A Case Study on Deception Detection](https://mlsanity.com/paper/1811.07901/) (2018)
- [Explainable Artificial Intelligence (XAI) 2.0: A Manifesto of Open Challenges and Interdisciplinary Research Directions](https://mlsanity.com/paper/2310.19775/) (2023)
- [Explanations Can Reduce Overreliance on AI Systems During Decision-Making](https://mlsanity.com/paper/2212.06823/) (2022)
- [What Large Language Models Know and What People Think They Know](https://mlsanity.com/paper/2401.13835/) (2024)
- ['It's Reducing a Human Being to a Percentage'; Perceptions of Justice in Algorithmic Decisions](https://mlsanity.com/paper/1801.10408/) (2018)
- ["Why is 'Chicago' deceptive?" Towards Building Model-Driven Tutorials for Humans](https://mlsanity.com/paper/2001.05871/) (2020)
- [Classifier Calibration: A survey on how to assess and improve predicted class probabilities](https://mlsanity.com/paper/2112.10327/) (2021)
- [Understanding the Role of Human Intuition on Reliance in Human-AI Decision-Making with Explanations](https://mlsanity.com/paper/2301.07255/) (2023)
- [Who Should I Trust: AI or Myself? Leveraging Human and AI Correctness Likelihood to Promote Appropriate Trust in AI-Assisted Decision-Making](https://mlsanity.com/paper/2301.05809/) (2023)
- [Deciding Fast and Slow: The Role of Cognitive Biases in AI-assisted Decision-making](https://mlsanity.com/paper/2010.07938/) (2020)
- [In Search of Verifiability: Explanations Rarely Enable Complementary Performance in AI-Advised Decision Making](https://mlsanity.com/paper/2305.07722/) (2023)
- [A Multimodal Vision Foundation Model for Clinical Dermatology](https://mlsanity.com/paper/2410.15038/) (2024)
- [Conceptual Metaphors Impact Perceptions of Human-AI Collaboration](https://mlsanity.com/paper/2008.02311/) (2020)
- [Knowing About Knowing: An Illusion of Human Competence Can Hinder Appropriate Reliance on AI Systems](https://mlsanity.com/paper/2301.11333/) (2023)
- [Improving Human-AI Collaboration With Descriptions of AI Behavior](https://mlsanity.com/paper/2301.06937/) (2023)
- [ViCE: Visual Counterfactual Explanations for Machine Learning Models](https://mlsanity.com/paper/2003.02428/) (2020)
- [A Systematic Literature Review of User Trust in AI-Enabled Systems: An HCI Perspective](https://mlsanity.com/paper/2304.08795/) (2023)
- [Selective Explanations: Leveraging Human Input to Align Explainable AI](https://mlsanity.com/paper/2301.09656/) (2023)
- [Explain, Edit, and Understand: Rethinking User Study Design for Evaluating Model Explanations](https://mlsanity.com/paper/2112.09669/) (2021)
- ["Are You Really Sure?" Understanding the Effects of Human Self-Confidence Calibration in AI-Assisted Decision Making](https://mlsanity.com/paper/2403.09552/) (2024)

## Abstract (arXiv)

AI consumer markets are characterized by severe buyer-supplier market asymmetries. Complex AI systems can appear highly accurate while making costly errors or embedding hidden defects. While there have been regulatory efforts surrounding different forms of disclosure, large information gaps remain. This paper provides the first experimental evidence on the important role of information asymmetries and disclosure designs in shaping user adoption of AI systems. We systematically vary the density of low-quality AI systems and the depth of disclosure requirements in a simulated AI product market to gauge how people react to the risk of accidentally relying on a low-quality AI system. Then, we compare participants' choices to a rational Bayesian model, analyzing the degree to which partial information disclosure can improve AI adoption. Our results underscore the deleterious effects of information asymmetries on AI adoption, but also highlight the potential of partial disclosure designs to improve the overall efficiency of human decision-making.