Artificial intelligence and scientific discovery: a model of prioritized search

Ajay Agrawal, John McHale and Alexander Oettl

Research Policy, 2024, vol. 53, issue 5

Abstract: We model a key step in the innovation process, hypothesis generation, as the making of predictions over a vast combinatorial space. Traditionally, scientists and innovators use theory or intuition to guide their search. Increasingly, however, they use artificial intelligence (AI) instead. We model innovation as resulting from sequential search over a combinatorial design space, where the prioritization of costly tests is achieved using a predictive model. The predictive model's ranked output is represented as a hazard function. Discrete survival analysis is used to obtain the main innovation outcomes of interest – the probability of innovation, expected search duration, and expected profit. We describe conditions under which shifting from the traditional method of hypothesis generation, using theory or intuition, to instead using AI that generates higher fidelity predictions, results in a higher likelihood of successful innovation, shorter search durations, and higher expected profits. We then explore the complementarity between hypothesis generation and hypothesis testing; potential gains from AI may not be realized without significant investment in testing capacity. We discuss the policy implications.

Keywords: Artificial intelligence; Scientific discovery; Scientific Search; Innovation; Theory (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: Artificial Intelligence and Scientific Discovery: A Model of Prioritized Search (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:53:y:2024:i:5:s0048733324000386

DOI: 10.1016/j.respol.2024.104989

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