The Business of Prediction
from Part I - AI and Consumer Psychology
Published online by Cambridge University Press: 05 June 2026
Prediction is explored as both a core human cognitive function and a defining strength of AI systems. The chapter traces the history of prediction from statistical forecasting to modern personalization engines. It explains how humans rely on heuristics, experience, and context, while AI systems leverage large-scale data and probabilistic modeling. Applications in advertising, healthcare, and education illustrate AI’s predictive power, but the chapter also warns of pitfalls such as overfitting, bias, and Goodhart’s Law (when metrics distort outcomes). The key argument is that prediction succeeds when human judgment and machine learning complement one another, not when either acts alone.
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