When Algorithms Set Corporate Incentives: Who Is Responsible For The Decision Before The Decision?
Nitisha Bhardwaj, Independent Legal Researcher
ABSTRACT
Corporate law usually asks who made a decision. That question becomes harder when an AI system has already shaped what the decision-maker sees. A company may use AI to rank transactions, customers, employees, or compliance matters. A human then makes the final choice. But the human may be choosing from a list that the system has already produced.
This essay argues that corporate oversight should sometimes move one step before the final decision. The concern is not simply that AI makes mistakes or that humans always follow algorithms. The concern arises when a company turns an AI ranking into part of its working process, builds incentives around that ranking, receives serious warning signs that the system is affecting behaviour or causing important matters to be missed, and does not respond. In that situation, the formal presence of a human decision- maker should not end the inquiry. This is not a proposal for a new “AI fiduciary duty.” It is a narrower application of existing oversight principles to a new corporate risk. SEBI's treatment of AI used by regulated entities provides a useful Indian example because responsibility remains with the regulated entity even when the technology comes from a third-party provider. The proposed U.S. MIND Act raises a different but related concern: technology can shape human choice before the final choice becomes visible. Corporate law may therefore need to ask not only who made the decision, but who shaped the conditions in which that decision was made.
Keywords: Artificial Intelligence, Corporate Oversight, Algorithmic Decision-Making, Caremark Doctrine, Board Oversight, AI Accountability.
