Why Daniel Kahneman Is Really Excited About AI

Happy Wednesday. Those of you who read the Fortune CEO Daily—penned each morning at an ungodly hour by my boss, Alan Murray—got a taste of what seems like a fascinating panel on artificial intelligence at Davos. (If you don’t already subscribe, you really should—Here’s the sign-up link.)

The panel included Mustafa Suleyman, co-founder of DeepMind (gobbled up for a song by Google in 2014), Microsoft CEO Satya Nadella, Dow CEO Andrew Liveris, and the cognitively impressive head of IBM Watson, David Kenny, whom I interviewed at length in October. You can find Alan’s full post from this morning here.

As it happens, I too was planning to write about AI today—after hearing the brilliant Daniel Kahneman speak at an informal salon arranged by Zachary Todd and Saumitra Thakur, who have set up a forward thinking network called College-100.

Kahneman, who won the Nobel Prize in economic sciences in 2002 and who wrote the runaway bestseller and book-club fave Thinking, Fast and Slow, has elucidated a masterful theory of human decision-making and judgment—which appears to operate under two interlocking systems. “System 1,” in Kahneman’s model, is the gut-reactor of the mind, twitch-quick and intuitive. This is our “fast thinking” machine. As the psychologist explains in the intro to the book above: “Fast thinking includes both variants of intuitive thought—the expert and the heuristic—as well as the entirely automatic mental activities of perception and memory, the operations that enable you to know there is a lamp on your desk or retrieve the name of the capital of Russia.”

System 2 is slower, more deliberative, more analytical, more, well… thinking-like.

On Sunday, Kahneman recalled one of the recent milestones in AI achievement—the stunning defeat of the world’s foremost Go champion last March by DeepMind’s AlphaGo. (My former colleague Roger Parloff wrote a truly marvelous feature on the machine-learning science that led up to this seminal event, which I urge you all to read.)

What made Kahneman marvel was that the feat was a victory, in some respects, in the more mysterious half of the bifurcated kingdom of cognition. The ancient Go is not just infinitely more complicated than chess, he said, it is also “a game of intuition. It’s far less a game of rules than chess is.”

“In a way, Go is a game of pure skill in the way that I use System 1 to describe—and artificial intelligence seems to be mimicking intuitive skills in System 1,” said Kahneman. And it’s doing that not just in games, but also in an increasing number of real-world venues of decision-making. We’re already seeing that in medical diagnosis. And more and more, Kahneman predicted, we’re going to see that in business across-the-board. So, for example, “when you present the proposition for a merger or for an acquisition, you will have software” to help you make the judgment.

“And it’s System 1,” he repeated in emphasis, “not System 2—the deliberative system, which works more on logic. That is much easier to program than programming intuition. So the direction of AI is remarkable.”

At the time of AlphaGo’s victory, Google cofounder Sergey Brin said the DeepMind team had instilled “a level of beauty inside a computer.”

Hmm. Beauty in judgment. What a wonderful notion.