Using Machine Learning to Generate, Clarify, and Improve Economic Models

Machine learning algorithms can now outperform classic economic models in predicting quantities ranging from bargaining outcomes, to choice under uncertainty, to an individual's future jobs and wages. Yet this predictive accuracy comes at a cost: most machine learning algorithms function as black boxes, offering little insight into \emph{why} outcomes occur. This article asks whether machine learning can guide the development of new economic theories. Economic models serve an important purpose...