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An AI system for loan approval was trained mostly on data from one city. What is the likely outcome when used nationwide?

medium📝 Application Q4 of 15
AI for Everyone - AI Ethics and Society
An AI system for loan approval was trained mostly on data from one city. What is the likely outcome when used nationwide?
AIt may unfairly reject applicants from other cities
BIt will crash due to data overload
CIt will approve all applicants regardless of risk
DIt will perform equally well everywhere
Step-by-Step Solution
Solution:
  1. Step 1: Understand training data bias

    Training mostly on one city means the AI learned patterns specific to that city.
  2. Step 2: Predict real-world effect

    When used elsewhere, it may misjudge applicants, causing unfair rejections.
  3. Final Answer:

    It may unfairly reject applicants from other cities -> Option A
  4. Quick Check:

    Training bias = Unfair rejection [OK]
Quick Trick: Limited data scope causes unfair results outside that scope [OK]
Common Mistakes:
  • Assuming AI generalizes perfectly
  • Thinking it crashes from data scope

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