AI and innovation with Ethan Bueno de Mesquita | a16z crypto research talks

Ethan Bueno de Mesquita (University of Chicago) considers a model of the effects of competition from AI on production and innovation by content creators - introducing prices, which are often ignored, into the analysis. Human producers create content that is both sold directly to consumers and used as training data for AI. The AI generates a substitute good for human-generated content at zero marginal cost; the more training data the AI has access to, the higher quality the AI-generated content. The higher the quality of AI-generated content, the more consumers substitute away from human generated content, the lower the market price of human-generated content, the less human-generated content is produced, and the lower the profits to the human producers.
Ethan shows that, even though AI crowds out human production, because of price adjustments, exogenous improvements in the ability of AI to translate data into high-quality content, can benefit consumers. He also explores the effects of improvements in AI on innovation by human producers. He captures this by allowing for the possibility that human producers can pay a fixed cost to create a new product for which there is not any pre-existing training data, showing that exogenous improvements in AI can have non-monotone effects on the amount of innovation.
About the presenter
Ethan is the Dean and Sydney Stein Professor at the University of Chicago Harris School of Public Policy. He is a political scientist whose research applies game theoretic models to the study of political violence, national security, electoral politics, and technology and society; he has also written extensively on methodological issues in the social sciences. He writes and advises leaders in the public and private sectors on both national security matters and issues at the intersection of technology and society. He is the author or co-author of Political Economy for Public Policy, Theory and Credibility, and Thinking Clearly with Data (all from Princeton University Press). His research has been supported by the National Science Foundation, the Office of Naval Research, and the United States Institute of Peace.
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