Microeconomics of AI Adoption

A quote from Galileo is often repeated in technical and scientific circles: “Mathematics is the language in which God has written the universe”. Perhaps scientists and engineers see patterns in everything and act accordingly. But we are not gods. Despite being mostly rational, we have many biases which can be detrimental to adoption of technologies. Two of them are Hyperbolic Discounting and Parkinson’s Law of Triviality. What do those mean? Let’s take a dig.

The former bias — Hyperbolic Discounting — claims that human beings give preference to smaller, immediate results over the possibility of better results in the future. This tendency makes us choose technologies that give us a lot of immediate utility over technologies that may give larger and longer-term benefits. For example, in United States, a rise in the adoption rate from 20% to 40% (as a percentage of households) of technologies like microwaves, color TVs, and computers took less than 5 years. But the same leap for landlines took several decades. The reason is simple: Network Externality. Landlines did not give immediate value because they required other households to be connected to the wire — no easy task — so the focus on more immediate, and easier to implement, technologies took precedence. Similarly, AI adoption will increase at a rapid rate if, and only if, it displays some magnitudinal value to enterprises with immediate returns on investment. Otherwise AI will be part sensible theory, but just as much a practical dream.

The latter bias is Parkinson’s Law of Triviality which says that human beings tend to pick up and solve easy problems to get assured credibility rather than complex ones which may reward them more heftily. Organizations may pick up ready-made AI- and ML-powered conversational chat bots for better customer engagement whereas the possibility of solving day-to-day, business-crippling problems arising due to complex IT structures may be extremely small exactly because of the complexity of the issues and the difficulty in addressing them.

Would it not be better if there were a zero-touch machine combined with high intelligence that not only uncovers hidden patterns in IT systems of different scenarios, but also promptly takes preventive actions?

There is such a solution: ignio.

ignio aggregates data from different sources and applies intelligence to understand the enterprise IT landscape. In the case of any system failures, ignio first checks for patterns in different attributes, such as CPU and memory utilization, of observed and other complicatedly-related systems and proactively identifies the root causes of incidents with high accuracy. Then, based on the intelligent reasoning, ignio quickly applies a remedy to avoid any downtime. Long story short: it offers Business Assurance through cognitive automation.

ignio is already out-matching all kind of biases of many Fortune 500 companies. What is holding you back from joining the bandwagon?

by Debasree Panda

References:

  • https://ourworldindata.org/grapher/technology-adoption-by-households-in-the-united-states
  • https://www.researchgate.net/publication/5223284_Venture_Capitalists’_Decision_Policies_Across_Three_Countries_An_Institutional_Theory_Perspective
  • https://www.researchgate.net/publication/4967877_The_Nature_of_Information_and_Overconfidence_on_Venture_Capitalists’_Decision_Making

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