The Price of Judgment
The Price of Judgment Executives as Institutions: Pesawala Digest Discusses An Economic Case Against CEO Automation The claim that CEOs are “hugely expensive” and therefore prime candidates for automation reflects a familiar economic intuition: when the price of an input is high, firms search aggressively for substitutes. In an era of rapid advances in artificial intelligence, it is tempting to view top executives as an inefficient bottleneck: one individual paid the equivalent of thousands of workers, making judgment calls that might be codified, optimized, and scaled by machines. Yet the economics of automation, especially at the apex of organizations, is subtler than this intuition suggests. From a cost perspective, the argument is superficially compelling. CEO compensation in large firms routinely reaches tens of millions of dollars annually. In standard production theory, such a factor would invite substitution by capital if capital could deliver equivalent output at lower ma...
