Evan Hurwitz

Tshilidzi Marwala, Evan Hurwitz

The advent of artificial intelligence has changed many disciplines such as engineering, social science and economics. Artificial intelligence is a computational technique which is inspired by natural intelligence such as the swarming of birds, the working of the brain and the pathfinding of the ants. These techniques have impact on economic theories. This book studies the impact of artificial intelligence on economic theories, a subject that has not been extensively studied. The theories that are considered are: demand and supply, asymmetrical information, pricing, rational choice, rational expectation, game theory, efficient market hypotheses, mechanism design, prospect, bounded rationality, portfolio theory, rational counterfactual and causality. The benefit of this book is that it evaluates existing theories of economics and update them based on the developments in artificial intelligence field.

Tshilidzi Marwala, Evan Hurwitz

When human agents come together to make decisions, it is often the case that one human agent has more information than the other. This phenomenon is called information asymmetry and this distorts the market. Often if one human agent intends to manipulate a decision in its favor the human agent can signal wrong or right information. Alternatively, one human agent can screen for information to reduce the impact of asymmetric information on decisions. With the advent of artificial intelligence, signaling and screening have been made easier. This paper studies the impact of artificial intelligence on the theory of asymmetric information. It is surmised that artificial intelligent agents reduce the degree of information asymmetry and thus the market where these agents are deployed become more efficient. It is also postulated that the more artificial intelligent agents there are deployed in the market the less is the volume of trades in the market. This is because for many trades to happen the asymmetry of information on goods and services to be traded should exist, creating a sense of arbitrage.