Power and Prediction - by Ajay Agrawal & Joshua Gans & Avi Goldfarb (Hardcover)

About the Book

"Banking and finance, pharmaceuticals, automotive, medical technology, retail. Artificial intelligence (AI) has made its way into many industries around the world. But the truth is, it has just begun its odyssey toward cheaper, better, and faster predictions to drive strategic business decisions-powering and accelerating business. When prediction is taken to the max, industries transform. The disruption that comes with such transformation is yet to be felt-but it is coming. How do businesses prepare? In their bestselling first book, Prediction Machines, eminent economists Ajay Agrawal, Joshua Gans, and Avi Goldfarb explained the simple yet game-changing economics of AI. Now, in Power and Prediction, they go further to reveal AI as a prediction technology directly impacting decision-making and to teach businesses how to identify disruptive opportunities and threats resulting from AI. Their exhaustive study of new developments in artificial intelligence and the past history of how technologies have disrupted industries highlights the striking phase we are now in: after witnessing the power of this new technology and before its widespread adoption-what they call "the Between Times." While there continue to be important opportunities for businesses, there are also threats of disruption. As prediction machines improve, old ways of doing things will be upended. Also, the process by which AI filters into the many systems involved in application is very uneven. That process will have winners and losers. How can businesses leverage, or protect, their positions? Filled with illuminating insights, rich examples, and practical advice, Power and Prediction is the must-read guide for any business leader or policy maker on how to make the coming AI disruptions work for you rather than against you"--

Book Synopsis

Disruption resulting from the proliferation of AI is coming. The authors of the bestselling Prediction Machines can help you prepare.

Artificial intelligence (AI) has impacted many industries around the world--banking and finance, pharmaceuticals, automotive, medical technology, manufacturing, and retail. But it has only just begun its odyssey toward cheaper, better, and faster predictions that drive strategic business decisions. When prediction is taken to the max, industries transform, and with such transformation comes disruption.

What is at the root of this? In their bestselling first book, Prediction Machines, eminent economists Ajay Agrawal, Joshua Gans, and Avi Goldfarb explained the simple yet game-changing economics of AI. Now, in Power and Prediction, they go deeper, examining the most basic unit of analysis: the decision. The authors explain that the two key decision-making ingredients are prediction and judgment, and we perform both together in our minds, often without realizing it. The rise of AI is shifting prediction from humans to machines, relieving people from this cognitive load while increasing the speed and accuracy of decisions.

This sets the stage for a flourishing of new decisions and has profound implications for system-level innovation. Redesigning systems of interdependent decisions takes time--many industries are in the quiet before the storm--but when these new systems emerge, they can be disruptive on a global scale. Decision-making confers power. In industry, power confers profits; in society, power confers control. This process will have winners and losers, and the authors show how businesses can leverage opportunities, as well as protect their positions.

Filled with illuminating insights, rich examples, and practical advice, Power and Prediction is the must-read guide for any business leader or policymaker on how to make the coming AI disruptions work for you rather than against you.

Review Quotes

"Highly accessible, cleverly written [with] great ideas for practically implementing AI across a system." -- Dialogue

"A must for anyone with an interest in how the world may look in future." -- Institute of Leadership and Management Edge magazine

Named one of the 10 Best Business Books of 2022 by Forbes

A Toronto Star Bestseller

"This jauntily written and thought-provoking book sketches out how this new economic revolution might unfold." -- Financial Times

"...a timely and insightful follow up to Prediction Machines." -- Engineering and Technology Magazine, The Institution of Engineering and Technology

"It's an interesting argument, and the book that Gans and his co-authors have published makes a strong case for developing system-level AI applications in organizations and institutions..." -- Forbes

Advance Praise for Power and Prediction:

"This is a book that leaders of all types of organizations should read. It explains the enormous size of the AI opportunity and the challenges in getting there." -- Dominic Barton, Chair, Rio Tinto; former Global Managing Partner, McKinsey & Company

"AI may be to the twenty-first century what electricity was to the twentieth. This is the best book yet that considers what it will mean for all who participate in our economy." -- Lawrence H. Summers, Charles W. Eliot University Professor and former president, Harvard University; former secretary, US Treasury; and former chief economist, World Bank

"AI will surely displace jobs and disrupt industries in the decades to come. The system-level changes that are on the horizon are excitingly discussed in this book." -- Vinod Khosla, founder, Khosla Ventures; cofounder, Sun Microsystems

"Power and Prediction is a hugely thought-provoking and inspiring primer on how to shape strategy and design organizations in the age of AI." -- Heather Reisman, founder and CEO, Indigo Books and Music

"We're told AI will be the most important thing humanity ever works on, yet it feels abstract and niche in its current impact on the world. This book is a must-read for anyone who wants to peek around the corner into AI's future." -- Shivon Zilis, Director of Operations and Special Projects, Neuralink; former project director, Tesla

"Nobody provides more insight into the fundamental economics of AI and what AI truly enables than Agrawal, Gans, and Goldfarb." -- Tiff Macklem, governor, Bank of Canada

"Agrawal, Gans, and Goldfarb have done it again! Their new book, Power and Prediction, is destined to become the definitive guide to understanding how and why AI is transforming the economy." -- Erik Brynjolfsson, Jerry Yang and Akiko Yamazaki Professor, Stanford University; Director, Stanford Digital Economy Lab; coauthor, The Second Machine Age

"Whether we like it or not, artificial intelligence is set to influence every aspect of our lives. How can we make sure that individuals, companies, and organizations benefit from it rather than waste time and resources dealing with unintended consequences? This readable book provides an excellent introduction, emphasizing how AI can improve what we do by providing better predictions and helping reorganize systems." -- Daron Acemoglu, Elizabeth and James Killian Professor of Economics, MIT; author, When Nations Fail

"Power and Prediction is an important book not only for economists who model the impact of artificial intelligence and entrepreneurs who want to maximize its benefits but also for social scientists and public policy analysts. The authors put prediction problems squarely within the systems and the rules in which they operate to help us understand what will work and why. Along the way, they shine a new light on the importance of systems and rules. A must read for everyone in the public as well as the private sector." -- Janice Gross Stein, Professor of Political Science, Munk School, University of Toronto

About the Author

Ajay Agrawal is Professor of Strategic Management and the Geoffrey Taber Chair in Entrepreneurship and Innovation at the University of Toronto's Rotman School of Management. He is founder of the Creative Destruction Lab and the Metaverse Mind Lab and cofounder of NEXT Canada and Sanctuary.

Joshua Gans is the Jeffrey S. Skoll Chair of Technical Innovation and Entrepreneurship and Professor of Strategic Management at Toronto's Rotman School of Management. He is Chief Economist of the Creative Destruction Lab, department editor (Strategy) at Management Science, and cofounder and managing director of Core Economic Research.

Avi Goldfarb is the Rotman Chair in Artificial Intelligence and Healthcare and Professor of Marketing at Toronto's Rotman School of Management. He is also Chief Data Scientist at the Creative Destruction Lab, a fellow at Behavioral Economics in Action at Rotman, and a faculty affiliate at the Vector Institute for Artificial Intelligence.