Do people prefer stories written by AI?

Here's a scoop from inside writing circles (pre-AI era): we were a lot into "good writing techniques". Not into communication. We wanted to produce a "marketable product". On the way, we (writers, literature professors, critics, etc) trained readers and writers to appreciate technique by telling them there was such a thing. We established tropes, because "This enemies-to-lovers story is good" sells more than "you should read Book". AI is very good at techniques and tropes. If readers want authentic human writing, they will have to change.

Reading this, I'm reminded of... New Coke.

Despite post facto conspiracy theories that it was a guerilla marketing campaign to promote "Old Coke", it was not. Coca-Cola tested a new formula in focus groups and people preferred it at the time because, basically, it was sweeter. But this didn't translate into longer term consumption. It's a cautionary tale in how data science can fail and how you shouldn't necessarily extrapolate to the long-term from the short-term.

So when people say they preferred AI written stories, what are they really reacting to? There's probably a lot of elements that are engaging but is it a lasting story? Most enduring stories become so because they speak to some truth of the current times or the human condition that can be hard to separate from the technical merits of the story.

Example #1: Fight Club both as a book and a movie was a bit of a sleeper hit. It was a box office failure. But it became a cult classic because it was one of the earlier works that spoke to the loss of a future for men in our society.

Example #2: The Rocky Horror Picture Show. Again, it was a sleeper hit but it built over time as a relatively early Western expression of queer culture, gender identity and cultural conformance.

Example #3: The Wire. While it had great writing it has endured as a testament to institutional failure at every level and that doesn't necessarily take a villain. Everybody can be acting in their own interests and you end up with inevitable failure anyway.

Example #4: The Great Gatsby. This was never a hit in F. Scott Fizgerald's lifetime. How it became one is an interesting story. Basically, during WW2 the Army created these small print books for deployed soldiers to easily carry and read. Then once the war ended and many of the veterans went to college, they wrote about the Great Gatasby. It's now viewed as an American masterpiece that captures the 1920s like few other works. It expresses class consciousness and some of the metaphors (like the green light on the dock) are debated to this day.

Now, could AI write things that coherently speak to the human condition this way? Not yet (IMHO). Far from it.

That being said, there are only so many base story structures. Take the romance category. You'll find repeated tropes. Could AI write what might best be called "pulp fiction" in that genre? Probably sooner rather than later.

"Do you prefer imperfect human writing or AI writing?" is a question that is loaded.

It's absolute horseshit (and I would say somewhat sociopathic) to try to A/B test that to catch people out as if to say "aha you are lying to yourself because you can't tell".

People's preferences are representative of their desires and aspirations, their future self-perception, their better self, etc. I'm sad that you seem to think that is something they should be disabused of by statistical means.

It would be misanthropic to assume that because people say they want healthier food but then don't buy it, that they don't really want it. The proper response to that is not to give people what their behaviour says they will actually buy; it is to broadly compel food producers to make healthier food that matches what they wish they would more often choose.

ETA: above all what I want to impress upon you is that "people are really good at lying to themselves" is not actually a statement of fact; it is your opinion and interpretation projected onto the data you choose. There are other ways to explain this gap that do not involve fundamental attribution error.

Is art what is generated, or is art what is in the eye of the beholder? Do we find artistry in nature?

What does it say about us that the sum average of us disgusts us on a visceral artistic level, is that the machine's fault for reflecting us accurately?

No that makes them more interesting for the same reasons OP gave. You try to build a mental model of this mystery person from a mysterious time, where ever little detail could be a clue about them, their society/culture, or just trivial.

With AI writing the answer is that everything is randomly averaged and thus trivial.