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Breakthroughs, Backlashes and Artificial General Intelligence: An Extended Real Options Approach

Author

Listed:
  • Gries, Thomas

    (University of Paderborn)

  • Naudé, Wim

    (RWTH Aachen University)

Abstract

Breakthroughs and backlashes have marked progress in the development and diffusion of Artificial Intelligence (AI). These shocks make the investment in developing an Artificial General Intelligence (AGI) subject to considerable uncertainty. This paper applies a real options model, extended to account for stochastic jumps, to model the consequences of these breakthroughs and backlashes characterising on investment for an AGI. The model analytics indicate that the average magnitude and frequency of stochastic jumps will determine the optimum amount of time and money to invest in pursuing an AGI and that these may be too expensive and time-consuming for most private entrepreneurs.

Suggested Citation

  • Gries, Thomas & Naudé, Wim, 2022. "Breakthroughs, Backlashes and Artificial General Intelligence: An Extended Real Options Approach," IZA Discussion Papers 15077, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15077
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    References listed on IDEAS

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    More about this item

    Keywords

    radical innovation; real option models; artificial intelligence; risk;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools

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