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Understanding the choice of human resource and the artificial intelligence: “strategic behavior” and the existence of industry equilibrium

Dipankar Das (School of Management, BML Munjal University, Gurugram, India)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 7 March 2022

Issue publication date: 24 February 2023




Artificial intelligence (AI) has become an input to the production of goods and services. Therefore, a general question is there that “How the labor hour/human resource will be replaced by the artificial intelligence?” To answer this question, the paper considers that both AI and the human resources (HR) are the inputs to the firm and explains the choice between the two with reference to the customer relationship management. The paper derives the individual firms and the industry demand functions of the AI and the HR when both are present in the production of the identical or closely related goods and services. Moreover, the paper also shows the strategic behavior of an individual firm with the industry in selecting the AI and the HR. It has been shown that the individual firm's choice in the industry depends on the choice of the industry leader. The paper explains the supermodular game between the firms in an industry.


Game theory, industrial organization and non-convexity theories have been used in this paper to identify the choice between the HR and the AI in the customer relationship management.


The paper explains analytically the preference and demand for AI in the industry. Individual firm's strategic behavior and decision on choosing AI and the industry equilibrium have been studied logically. Moreover, the paper gives some light on the question of employment in presence of AI. The paper proves that in the presence of AI, labor demand will not be reduced but both will be used.


This work proves for the first time using some logical derivation that AI will not crowd out labor from the market. Moreover, to run AI, labor should also be used. It has been proved that to complete a job with speed and quality, both AI and HR are to be used.



The author would like to express gratitude to Professor Parikshit Ghosh, Associate Professor at the Delhi School of Economics and Professor Anwar Shaikh, Professor of Economics, Department of Economics, Graduate Faculty, New School for Social Research for their valuable suggestions and inputs. Moreover, the author acknowledges the reviewers for their valuable review comments and suggestions. There is no funding for this research.


Das, D. (2023), "Understanding the choice of human resource and the artificial intelligence: “strategic behavior” and the existence of industry equilibrium", Journal of Economic Studies, Vol. 50 No. 2, pp. 234-267.



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