Prediction Machines: The Simple Economics of Artificial Intelligence

Ajay Agrawal, Joshua Gans, Avi Goldfarb

Technology

Three economists argue that AI's core contribution is dramatically cheaper prediction, and that reframing AI as a prediction technology rather than a general intelligence clarifies both its economic value and its limits—cheap prediction changes what judgment and data are worth. Concise and analytically clear, it is the standard business-audience primer on AI's economic mechanics. Widely assigned in MBA and executive education contexts adjacent to a16z's enterprise and infrastructure investment theses.