Uncertainty can slow economic growth.

Watson Wins

by Elaine Schwartz    •    Feb 18, 2011    •    595 Views

Playing against Jeopardy champs Ken Jennings and Brad Rutter, Watson, the IBM computer won.

Imagine three podiums. One is labeled Ken, the middle one Watson, and the third one, Brad. IBM assured everyone that Watson had no internet access and all three players had to use their mechanical buzzers. Host Alex Trebek ran the game as he always had. Categories? For this round the contestants could choose from: Literary Character APB, Beatles Names, Olympic Oddities, Name the Decade, Final Frontiers, Alternate Meanings.

The game soon revealed Watson’s strengths:

Memory: Having “gobbled” up information from books, movie scripts, encyclopedias, dictionaries, countless sources, Watson knew it all and won’t forget anything.

Reaction time: Watson was fast. (And he was programmed to buzz only when he had the answer while the humans sometimes buzzed just before they thought of it.)

Decision-making: With wagering a part of the game, Watson had to decide what to bet. He had sufficient information about the facts and past games to know how much would be appropriate.

You might enjoy this TED talk about Watson.

The Economic Lesson

With countless business, medical, and consumer applications where Watson’s skills are valuable, “he” can affect all of us.  Physicians, for example, could consult Watson for speedy medical diagnoses that could include a “confidence” number indicating whether the statistics are convincing.

As economists, Watson takes us to spillovers and positive externalities.  Originally involving 2 entities, Watson’s impact will ripple outward to benefit many.

So really, everyone, not just Watson, has won.


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