Abstract

This article studies the effects of the adoption of artificial intelligence on teams and their performance and coordination in a laboratory experiment. We posit that automation decreases organizational performance, interferes with team member coordination, and leads to behavioral changes in human co-workers. We randomize the introduction of automated players and new hires into "laboratory firms" (Weber and Camerer, 2003) who must coordinate in teams playing a game on the Nintendo Switch console. We demonstrate experimentally that even in a task where AI outperforms humans, the replacement of a human player by an automated videogame agent decreases team performance. We also find that automation leads to an increase in coordination failures, and reduces team trust and individual effort provision. Finally, we explore the distributional consequences of introducing AI within teams and show that the performance effects are especially large in the short-term and in low- and medium-skilled teams whose skills we pre-tested. Overall, our team-based design supports a perspective that collaborative human-machine interaction is key to the positive transformation that AI may bring to teams, organizations, and work more broadly.