Data-centric curation pipelines frequently rely on model confidence scores to flag and filter noisy or mislabeled training instances. Evaluating this filtering convention on a large-scale consumer lending sample (LendingClub, N = 1,344,936) uncovers an underlying demographic asymmetry: high-income defaulters are disproportionately classified as label noise relative to low-income defaulters (Cramer's V approximately 0.03-0.07). Re-examining this behavior through the lens of equal opportunity [Hardt et al., 2016] reveals a far more severe discrepancy: a 16.86 percentage point gap in true positive rate (recall) between high- and low-income borrowers who ultimately defaulted. Implementing a sequential feature-blinding methodology allows us to isolate the drivers of this disparity across three distinct mechanisms: (1) direct reliance on self-reported applicant income; (2) algorithmic absorption of upstream institutional bias encoded within origination interest rates; and (3) a residual disparity (3.55 percentage points in cross-validation; 2.56 percentage points on a held-out test partition, Z = -4.04, p < 0.0001) that remains even after purging both income and interest rates from the model. Out-of-sample signed SHAP valuations demonstrate that this residual gap is maintained by structural proxies, most notably loan amount and home ownership status. These empirical findings show that simply blinding an algorithm to sensitive attributes fails to ensure fairness when institutional pricing decisions and behavioral proxy variables collectively reconstruct the omitted signals. We outline the practical implications of these findings for auditing data-centric AI workflows within regulated financial institutions.
Alessandro Morosini, Sarah H. Cen, Andrew Ilyas +3cs.CL cs.CY cs.LG cs.SI
Personalization algorithms determine what content users encounter on online platforms. Auditing these systems is difficult because independent auditors have only black-box access to the algorithms, while personalization depends on users' attributes, behavior, and evolving interaction histories. Existing auditing methods face a tradeoff: studies with real users capture realistic behavior but are costly and hard to control, whereas sock-puppet audits scale more easily but often rely on scripted behavior that limits realism. Beyond this, both approaches struggle to decouple user attributes from user behavior, limiting our ability to causally understand personalization. To address this gap, we introduce a framework for black-box audits of personalization algorithms using generative AI agents as behavioral engines for synthetic accounts. Each agent is instantiated with a fixed persona, grounded in demographic and political survey data, and interacts with a platform's content by reasoning about it and choosing actions. Because behavior is fixed within each persona while platform-visible signals such as age, gender, or location can be experimentally perturbed, our design enables counterfactual auditing of how platforms respond to user attributes. As a case study, we deploy 1,120 agents on X shortly after the 2024 U.S. election, spanning 14 personas and three counterfactual conditions, collecting over 200,000 content exposures. We find that X's algorithmic feed amplifies toxic, polarizing, political, and right-leaning content relative to the chronological feed, with amplification varying sharply by user ideology. Counterfactual analyses show that demographic signals affect content delivery in persona-dependent ways: pooled effects are largely null, while subgroup-level effects vary in direction and magnitude. Our work establishes GenAI-based agents as a new tool for algorithmic auditing.
We study the problem of auditing a black-box algorithmic decision-maker from observable inputs and outputs alone. Our main result is an exact decomposition: under precisely characterized conditions, the cumulative \emph{regret} of a dynamic policy equals the sum of per-period covariances between the cost vector and the policy's decision. This extends the single-period identity of Aldridge~(2026) to the full multi-period setting of stochastic dynamic programming. We prove the identity holds exactly under i.i.d. costs and mean-unbiased Markov policies, derive closed-form bias corrections for non-stationary and time-varying cases, and establish the discounted-horizon analog. A Bellman recursion for the covariance regret functional connects the result to standard reinforcement learning algorithms; for rolling-window policies, the estimation-error bias is $O(d/w)$. The decomposition has direct implications for algorithmic auditing in strategic environments: in platform mechanism design, it provides a welfare-based audit metric without access to the agent's private type; in repeated games, covariance reduction is a sufficient condition for policy improvement; in procurement and ad auctions, the bias correction quantifies welfare loss from strategic misreporting. The associated trajectory estimator is consistent, asymptotically normal with HAC variance, and computable in $O(T \cdot nd)$ time. This makes the proposed approach a tractable, model-free audit tool for platform mechanisms, algorithmic portfolio strategies, and any sequential decision system subject to external performance review.