An econometrics problem illustrates the difference between artificial and human intelligence. Understanding the tacit knowledge and limits of AI is crucial to implementing it effectively and fairly. One of the only lucid thought experiments ever conducted by econometricians, the "red bus-blue bus" problem illustrates a central drawback that comes with using statistical estimation to quantify the probability that a person will make a specific choice when faced with to various alternatives. As the thought experiment proceeds, imagine that you are indifferent about taking a car or a red bus to work. Due to his indifference, an estimate of his probability of choosing either option is to flip a coin.

One of the only lucid thought experiments ever carried out by econometricians, the "red bus-blue bus" problem illustrates a central drawback that comes with using statistical estimation to quantify the probability a person makes a specific choice when faced with several alternatives. As the thought experiment goes, imagine that you're indifferent between taking either a car or a red bus to work. Owing to your indifference, an estimate of your probability of picking either option is a coin flip. There is a 50 percent chance that you're taking the car and 50 percent that you're taking the red bus. Thus, your odds of selection are one-to-one.