“What does AI mean for my business? Read this book to find out.” Hal Varian, Berkeley Professor and Chief Economist, Google

Artificial Intelligence does the seemingly impossible, magically bringing machines to life - driving cars, trading stocks, and teaching children. But facing the sea change that AI will bring can be paralyzing. How should companies set strategies, governments design policies, and people plan their lives for a world so different from what we know? In the face of such uncertainty, many analysts either cower in fear or predict an impossibly sunny future.

But in Prediction Machines, three eminent economists recast the rise of AI as a drop in the cost of prediction. With this single, masterful stroke, they lift the curtain on the AI-is-magic hype and show how basic tools from economics provide clarity about the AI revolution and a basis for action by CEOs, managers, policy makers, investors, and entrepreneurs.

When AI is framed as cheap prediction, its extraordinary potential becomes clear:

• Prediction is at the heart of making decisions under uncertainty. Our businesses and personal lives are riddled with such decisions.

• Prediction tools increase productivity—operating machines, handling documents, communicating with customers.

• Uncertainty constrains strategy. Better prediction creates opportunities for new business structures and strategies to compete.

Penetrating, fun, and always insightful and practical, Prediction Machines follows its inescapable logic to explain how to navigate the changes on the horizon. The impact of AI will be profound, but the economic framework for understanding it is surprisingly simple.

Winner (Silver Medal) for the 2019 Axiom Award in the category of Business Intelligence/Innovation.

"AI may transform your life. And Prediction Machines will transform your understanding of AI. This is the best book yet on what may be the best technology that has come along." Larry Summers, Harvard Professor and former US Treasury Secretary, former Chief Economist of the World Bank, and former president of Harvard University

"This book makes artificial intelligence easier to understand by recasting it as a new cheap commodity -- predictions. It's a brilliant move. I found the book incredibly useful." Kevin Kelly,  Founding Executive Editor of WIRED and Author of What Technology Wants and The Inevitable

"Prediction Machines achieves a feat as welcome as it is unique: a crisp, readable survey of where artificial intelligence is taking us separates hype from reality, while delivering a steady stream of fresh insights. The key is that the authors view AI's life-changing developments through the lens of economics vs technology -- and thus speak in a language top executives and policymakers will understand.  Every leader needs to read this book." Dominic Barton, Global Managing Partner, McKinsey & Company

“Prediction Machines is a pathbreaking book that focuses on what strategists and managers really need to know about the AI revolution. Taking a grounded, realistic perspective on the technology, the book uses principles of economics and strategy to understand how firms, industries, and management will be transformed by AI.” Susan Athey, Stanford Professor and former Chief Economist at Microsoft

“Prediction Machines is a must-read for business leaders, policymakers, economists, strategists, and anyone who wants to understand implications of AI on designing business strategies, decisions, and how AI will impact our society. Read this book and learn from the best!” Ruslan Salakhutdinov, Carnegie Mellon Professor and Director of AI Research at Apple

"This is the first book to explain the economics of artificial intelligence. It's a must-read for every business person interested in this technology. I encounter so many people who feel excited but overwhelmed by AI. This book will ground those feeling lost by giving them a practical framework." Shivon Zilis, OpenAI Director and Partner at Bloomberg Beta

“The current AI revolution will likely result in abundance, but the process of getting there requires deliberation on tough topics that include increasing unemployment and income disparity. This book presents frameworks that allow decision makers to deeply understand the forces at play." Vinod Khosla, Khosla Ventures and Founding CEO of Sun Microsystems

“AI's the most transformative technology of our era. Agrawal, Gans, and Goldfarb not only understand its essence, but also deliver deep insights into its economic implications and intrinsic trade-offs. If you want to clear the fog of AI hype and see clearly the core of AI's challenges and opportunities for society, your first step should be to read this book.” Erik Brynjolfsson, MIT Professor and Author of The Second Machine Age and Machine Platform Crowd