Research Papers

Artificial Intelligence as Structural Estimation: Economic Interpretations of Deep Blue, Bonanza, and AlphaGo

Mitsuru Igami

Artificial intelligence (AI) has achieved superhuman performance in a growing number of tasks, but understanding and explaining AI remain challenging. This paper clarifies the connections between machine-learning algorithms to develop AIs and the econometrics of dynamic structural models through the case studies of three famous game AIs. Chess-playing Deep Blue is a calibrated value function, whereas shogi-playing Bonanza is an estimated value function via Rust's (1987) nested fixed-point method. AlphaGo's "supervised-learning policy network" is a deep neural network implementation of Hotz and Miller's (1993) conditional choice probability estimation; its "reinforcement-learning value network" is equivalent to Hotz, Miller, Sanders, and Smith's (1994) conditional choice simulation method. Relaxing these AIs' implicit econometric assumptions would improve their structural interpretability.

The advancement of robotic systems has revolutionized numerous industries, yet their operation often demands specialized technical knowledge, limiting accessibility for non-expert users. This paper introduces ROSA (Robot Operating System Agent), an AI-powered agent that bridges the gap between the Robot Operating System (ROS) and natural language interfaces. By leveraging state-of-the-art language models and integrating open-source frameworks, ROSA enables operators to interact with robots using natural language, translating commands into actions and interfacing with ROS through well-defined tools. ROSA's design is modular and extensible, offering seamless integration with both ROS1 and ROS2, along with safety mechanisms like parameter validation and constraint enforcement to ensure secure, reliable operations. While ROSA is originally designed for ROS, it can be extended to work with other robotics middle-wares to maximize compatibility across missions. ROSA enhances human-robot interaction by democratizing access to complex robotic systems, empowering users of all expertise levels with multi-modal capabilities such as speech integration and visual perception. Ethical considerations are thoroughly addressed, guided by foundational principles like Asimov's Three Laws of Robotics, ensuring that AI integration promotes safety, transparency, privacy, and accountability. By making robotic technology more user-friendly and accessible, ROSA not only improves operational efficiency but also sets a new standard for responsible AI use in robotics and potentially future mission operations. This paper introduces ROSA's architecture and showcases initial mock-up operations in JPL's Mars Yard, a laboratory, and a simulation using three different robots. The core ROSA library is available as open-source.

In Industry 4.0, Cyber-Physical Systems (CPS) generate vast data sets that can be leveraged by Artificial Intelligence (AI) for applications including predictive maintenance and production planning. However, despite the demonstrated potential of AI, its widespread adoption in sectors like manufacturing remains limited. Our comprehensive review of recent literature, including standards and reports, pinpoints key challenges: system integration, data-related issues, managing workforce-related concerns and ensuring trustworthy AI. A quantitative analysis highlights particular challenges and topics that are important for practitioners but still need to be sufficiently investigated by academics. The paper briefly discusses existing solutions to these challenges and proposes avenues for future research. We hope that this survey serves as a resource for practitioners evaluating the cost-benefit implications of AI in CPS and for researchers aiming to address these urgent challenges.

Counterfactual explanations have emerged as a popular solution for the eXplainable AI (XAI) problem of elucidating the predictions of black-box deep-learning systems due to their psychological validity, flexibility across problem domains and proposed legal compliance. While over 100 counterfactual methods exist, claiming to generate plausible explanations akin to those preferred by people, few have actually been tested on users ($\sim7\%$). So, the psychological validity of these counterfactual algorithms for effective XAI for image data is not established. This issue is addressed here using a novel methodology that (i) gathers ground truth human-generated counterfactual explanations for misclassified images, in two user studies and, then, (ii) compares these human-generated ground-truth explanations to computationally-generated explanations for the same misclassifications. Results indicate that humans do not "minimally edit" images when generating counterfactual explanations. Instead, they make larger, "meaningful" edits that better approximate prototypes in the counterfactual class.

Transparency, Governance and Regulation of Algorithmic Tools Deployed in the Criminal Justice System: a UK Case Study

Miri Zilka, Holli Sargeant, Adrian Weller

We present a survey of tools used in the criminal justice system in the UK in three categories: data infrastructure, data analysis, and risk prediction. Many tools are currently in deployment, offering potential benefits, including improved efficiency and consistency. However, there are also important concerns. Transparent information about these tools, their purpose, how they are used, and by whom is difficult to obtain. Even when information is available, it is often insufficient to enable a satisfactory evaluation. More work is needed to establish governance mechanisms to ensure that tools are deployed in a transparent, safe and ethical way. We call for more engagement with stakeholders and greater documentation of the intended goal of a tool, how it will achieve this goal compared to other options, and how it will be monitored in deployment. We highlight additional points to consider when evaluating the trustworthiness of deployed tools and make concrete proposals for policy.

The need for Explainable AI is increasing with the development of deep learning. The saliency maps derived from convolutional neural networks generally fail in localizing with accuracy the image features justifying the network prediction. This is because those maps are either low-resolution as for CAM [Zhou et al., 2016], or smooth as for perturbation-based methods [Zeiler and Fergus, 2014], or do correspond to a large number of widespread peaky spots as for gradient-based approaches [Sundararajan et al., 2017, Smilkov et al., 2017]. In contrast, our work proposes to combine the information from earlier network layers with the one from later layers to produce a high resolution Class Activation Map that is competitive with the previous art in term of insertion-deletion faithfulness metrics, while outperforming it in term of precision of class-specific features localization.

Cryptocurrency Valuation: An Explainable AI Approach

Yulin Liu, Luyao Zhang

Currently, there are no convincing proxies for the fundamentals of cryptocurrency assets. We propose a new market-to-fundamental ratio, the price-to-utility (PU) ratio, utilizing unique blockchain accounting methods. We then proxy various existing fundamental-to-market ratios by Bitcoin historical data and find they have little predictive power for short-term bitcoin returns. However, PU ratio effectively predicts long-term bitcoin returns than alternative methods. Furthermore, we verify the explainability of PU ratio using machine learning. Finally, we present an automated trading strategy advised by the PU ratio that outperforms the conventional buy-and-hold and market-timing strategies. Our research contributes to explainable AI in finance from three facets: First, our market-to-fundamental ratio is based on classic monetary theory and the unique UTXO model of Bitcoin accounting rather than ad hoc; Second, the empirical evidence testifies the buy-low and sell-high implications of the ratio; Finally, we distribute the trading algorithms as open-source software via Python Package Index for future research, which is exceptional in finance research.

Safe learning and optimization deals with learning and optimization problems that avoid, as much as possible, the evaluation of non-safe input points, which are solutions, policies, or strategies that cause an irrecoverable loss (e.g., breakage of a machine or equipment, or life threat). Although a comprehensive survey of safe reinforcement learning algorithms was published in 2015, a number of new algorithms have been proposed thereafter, and related works in active learning and in optimization were not considered. This paper reviews those algorithms from a number of domains including reinforcement learning, Gaussian process regression and classification, evolutionary algorithms, and active learning. We provide the fundamental concepts on which the reviewed algorithms are based and a characterization of the individual algorithms. We conclude by explaining how the algorithms are connected and suggestions for future research.

Designing Trustworthy AI: A Human-Machine Teaming Framework to Guide Development

Carol J. Smith

Artificial intelligence (AI) holds great promise to empower us with knowledge and augment our effectiveness. We can -- and must -- ensure that we keep humans safe and in control, particularly with regard to government and public sector applications that affect broad populations. How can AI development teams harness the power of AI systems and design them to be valuable to humans? Diverse teams are needed to build trustworthy artificial intelligent systems, and those teams need to coalesce around a shared set of ethics. There are many discussions in the AI field about ethics and trust, but there are few frameworks available for people to use as guidance when creating these systems. The Human-Machine Teaming (HMT) Framework for Designing Ethical AI Experiences described in this paper, when used with a set of technical ethics, will guide AI development teams to create AI systems that are accountable, de-risked, respectful, secure, honest, and usable. To support the team's efforts, activities to understand people's needs and concerns will be introduced along with the themes to support the team's efforts. For example, usability testing can help determine if the audience understands how the AI system works and complies with the HMT Framework. The HMT Framework is based on reviews of existing ethical codes and best practices in human-computer interaction and software development. Human-machine teams are strongest when human users can trust AI systems to behave as expected, safely, securely, and understandably. Using the HMT Framework to design trustworthy AI systems will provide support to teams in identifying potential issues ahead of time and making great experiences for humans.

Purpose: The governance of artificial iintelligence (AI) systems requires a structured approach that connects high-level regulatory principles with practical implementation. Existing frameworks lack clarity on how regulations translate into conformity mechanisms, leading to gaps in compliance and enforcement. This paper addresses this critical gap in AI governance. Methodology/Approach: A five-layer AI governance framework is proposed, spanning from broad regulatory mandates to specific standards, assessment methodologies, and certification processes. By narrowing its scope through progressively focused layers, the framework provides a structured pathway to meet technical, regulatory, and ethical requirements. Its applicability is validated through two case studies on AI fairness and AI incident reporting. Findings: The case studies demonstrate the framework's ability to identify gaps in legal mandates, standardization, and implementation. It adapts to both global and region-specific AI governance needs, mapping regulatory mandates with practical applications to improve compliance and risk management. Practical Implications - By offering a clear and actionable roadmap, this work contributes to global AI governance by equipping policymakers, regulators, and industry stakeholders with a model to enhance compliance and risk management. Social Implications: The framework supports the development of policies that build public trust and promote the ethical use of AI for the benefit of society. Originality/Value: This study proposes a five-layer AI governance framework that bridges high-level regulatory mandates and implementation guidelines. Validated through case studies on AI fairness and incident reporting, it identifies gaps such as missing standardized assessment procedures and reporting mechanisms, providing a structured foundation for targeted governance measures.

Foundation models, such as large language models (LLMs), have been widely recognised as transformative AI technologies due to their capabilities to understand and generate content, including plans with reasoning capabilities. Foundation model based agents derive their autonomy from the capabilities of foundation models, which enable them to autonomously break down a given goal into a set of manageable tasks and orchestrate task execution to meet the goal. Despite the huge efforts put into building foundation model based agents, the architecture design of the agents has not yet been systematically explored. Also, while there are significant benefits of using agents for planning and execution, there are serious considerations regarding responsible AI related software quality attributes, such as security and accountability. Therefore, this paper presents a pattern-oriented reference architecture that serves as guidance when designing foundation model based agents. We evaluate the completeness and utility of the proposed reference architecture by mapping it to the architecture of two real-world agents.

This paper critically evaluates the European Commission's proposed AI Act's approach to risk management and risk acceptability for high-risk AI systems that pose risks to fundamental rights and safety. The Act aims to promote "trustworthy" AI with a proportionate regulatory burden. Its provisions on risk acceptability require residual risks from high-risk systems to be reduced or eliminated "as far as possible", having regard to the "state of the art". This criterion, especially if interpreted narrowly, is unworkable and promotes neither proportionate regulatory burden, nor trustworthiness. By contrast the Parliament's most recent draft amendments to the risk management provisions introduce "reasonableness", cost-benefit analysis, and are more transparent about the value-laden and contextual nature of risk acceptability judgements. This paper argues that the Parliament's approach is more workable, and better balances the goals of proportionality and trustworthiness. It explains what reasonableness in risk acceptability judgments would entail, drawing on principles from negligence law and European medical devices regulation. And it contends that the approach to risk acceptability judgments need a firm foundation of civic legitimacy: including detailed guidance or involvement from regulators, and meaningful input from affected stakeholders.