When a Correction Comes, I’ll Be Quick to Buy into These ETFs
If it takes five minutes to make five widgets on five machines, how long does it take to make 100 widgets on 100 machines?
This question was first posed by Shane Frederick of the Massachusetts Institute of Technology and was part of a three-question quiz called the “Cognitive Reflection Test.” It was designed to test one’s cognitive ability versus one’s intuition. Half of you – or more – will get the answer by your intuition (100 minutes), but the cognitive – and correct – answer is five minutes.
This simple test underlines the idea that humans make cognitive errors when they answer questions with intuition. Artificial intelligence solves the problem of human bias and error. (In the five widgets/five machines example, output is one widget a machine every five minutes; therefore it would take 100 machines the same time to make 100 widgets.)
When making investment or other decisions, we are prone to errors, too. While automation will help solve for the cognitive errors we make, the bigger cost may be jobs. To be sure, how we work in the future will be changed significantly by robotics and AI.