From Regret to Subscription: The Consequences of AI Classification Failures on Streaming Platforms

Smart services are increasingly using artificial intelligence (AI) to tailor recommendations and content. Drawing from AI classification experience and identity-based motivation, this research explores the impact of AI classification failures on consumers' self-identity connection and regret,and how a creative identity expression shapes this impact. Across three studies, this research shows that AI classification failures can reduce consumers' self-identity connection and have downstream effects on consumer behavior. Consistent with our identity-based account, AI's detrimental effects are amplified when consumers are motivated to use AI to express their identityand are mitigated when self-expression motives are not salient. Given the potential impact of AI classification failures to be more detrimental to customers' self-identity in this environment, our findings have significant theoretical and managerial implications for the developing field of smart service failures.