The economics of artificial intelligence

Rotman School of Management professor Ajay Agrawal explains how AI changes the cost of prediction and what this means for business. With so many perspectives on the impact of artificial intelligence (AI) flooding the business press, it's becoming increasingly rare to find one that's truly original. So when strategy professor Ajay Agrawal shared his brilliantly simple view on AI, we stood up and took notice. Agrawal, who teaches at the University of Toronto's Rotman School of Management and works with AI start-ups at the Creative Destruction Lab (which he founded), posits that AI serves a single, but potentially transformative, economic purpose: it significantly lowers the cost of prediction. In his new book, Prediction Machines: The Simple Economics of Artificial Intelligence, coauthored with professors Joshua Gans and Avi Goldfarb, Agrawal explains how business leaders can use this premise to figure out the most valuable ways to apply AI in their organization.