AI will be the defining development of the 21st century. Within two decades, aspects of daily human life will be unrecognizable. AI will generate unprecedented wealth, revolutionize medicine and education through human-machine symbiosis, and create brand-new forms of communication and entertainment. In liberating us from routine work, however, AI will also challenge the organizing principles of our economic and social order.

Under the aegis of machine learning in our data-driven machine age, computers are programming themselves and learning about - and solving - an extraordinary range of problems, from the mundane to the most daunting. Today it is machine learning programs that enable Amazon and Netflix to predict what users will like, Apple to power Siri's ability to understand voices, and Google to pilot cars.

AI is coming fast and will affect every part of a business, including the role of the leader. And up until now, leaders have largely ceded their role in the transformation-pushing determination of strategy out to tech teams and leaving investment decisions with groups that don't have a full view of the organization. Just when responsible leadership is more imperative than ever, leaders are not stepping up to understand and execute in the new world of human-machine collaboration. A generation of AI transformation failures awaits if leaders don't connect their use of AI to their strategies.

Think of your most valuable skill, the thing you can reliably do under pressure to deliver results. How did you learn it? Whatever your job–plumber, attorney, teacher, surgeon–decades of research show that you achieved mastery by working with someone who knew more than you did. Formal learning—school and books—gave you conceptual knowledge, but you developed your skill by working with an expert.

Artificial intelligence does the seemingly impossible - driving cars, trading stocks, and teaching children. But facing the sea change that AI will bring can be paralyzing. How should companies set strategies, governments design policies, and people plan their lives for a world so different from what we know? In Prediction Machines, three eminent economists recast the rise of AI as a drop in the cost of prediction. With this single, masterful stroke, they lift the curtain on the AI-is-magic hype and show how basic tools from economics provide clarity about the AI revolution and a basis for action by CEOs, managers, policy makers, investors, and entrepreneurs.