Artificial Intelligence for Business

Session 8- Economics of AI Dr. Siby Abraham

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Decision making
• High quality machine prediction makes decision making faster and
democratic.

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Decision making
• High quality machine prediction makes decision making faster and
democratic.

• ‘The knowledge’, London cab

• https://www.youtube.com/watch?v=sU4W36_5oiM

• Understanding the impact of machine learning requires

understanding of anatomy of decisions.
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Anatomy of decisions

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Anatomy of decisions
Eg: Patient- doctor.

Judgement is an import aspect of decision

making process.

Machine may be good at prediction.

Other aspects are more in the realm of
human being.

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Decisions based on judgement
• Umbrella or not

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Decisions based on judgement
• Umbrella or not

• Judgement is the process of determining a reward to a particular

action in a particular environment. 7
Value of judgment
• Prediction machines don’t offer judgement, humans do.

• Human can move from prediction-judgement to more on judgement.

• With better predictions by machine, there can be better judgement.

• Eg: X ray/MRI

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Predicting to judging fraud

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We want more than prediction
• Eg: GPS

• We have got preference, taste, special interests.

• Machine may predict what is likely to happen. Humans still decide

what action to be taken.

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• Certain judgements can hard code

• Making machines to predict + judge => making decisions.

• Certain tasks, that may not be possible.

• Eg: creativity

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Predicting judgment
• Machines don’ t need human ways of judgment.

• It needs only previous data to predict future and then offer

judgement.

• Eg: Grammarly.

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Will human become irrelevant?
• Prediction and hence judgment of machine relies on data.

• It cant do anything if there are not data.

• It does poor job with rare data.

• Humans can still manage.

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• Better predictions help to handle more ‘if’ and ‘then’.

• In the absence of good prediction, we end up ‘satisficers’ than

‘optimizers’

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Fully automated decision making
• When a machine can undertake all aspects of decision making, not
just prediction, it can be fully automated.

• Very good at high risk areas. Eg: Manning hazardous situations.

• When it affects externalities, Govt can bring in regulations.

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• Case Study: AI - from data to ROI

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Tools
• AI- deconstruct work flows.

• Eg: Boat man vs bridge

• Same happened in computerization.

• Similar to computer, AI is a general purpose technology.

• But, AI tools provide point solution.

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AI tools
• Organizations are comprised of work flows.
• AI work less on process, more on objective.
• It demands restructuring of the process.
• Eg: chat box analytics

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Impact of AI tools on work flow
• AI can make tasks obsolete.

• AI can add new tasks.

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Decomposing decisions
• AI- a bicycle for mind.

• AI offers a specific solution, but not a complete work flow.

• It would help to make decisions.

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AI canvas
• Action: What is the tool trying to do.

• Prediction: What need to know to make decision

• Judgement: How to value different outcomes and errors.

• Outcome: Metrics of success.

• Input: What do we need to prediction

• Training: What data?

• Feedback: Outcomes to improve the algorithm.

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Job redesign
• Job: Collection of tasks.

• On breaking down a work flow some tasks may be obsolete, some

may be automated, some may be redefined and some may be added.

• Eg: Job of a teacher, doctor.

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Missing link in automation
• Even a small step can create issues.

• Automation demands complete standardization.

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Do we need radiologists?

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 Do we need radiologists?

Jeffory Hinton

Nature paper
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Self driving car
• Do we need more than a driver ?

• Eg: School bus driver.

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AI implication on job
• Augment jobs

• Contract jobs

• Reconstitution of jobs

• Shifting emphasis on specific skills for the job

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HB Case study

• SENSETIME: WORLD’S MOST VALUABLE ARTIFICIAL INTELLIGENCE STARTUP

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Project
Identify an AI start up which plans to revolutionise the way of doing
business.
Its potential, plans and present status.

https://www.forbes.com/sites/alanohnsman/2021/04/26/ai-50-
americas-most-promising-artificial-intelligence-
companies/?sh=4912de6d77cf

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