We met a man named John Holland who is a distinguished computer scientist at the University of Michigan. He's developed models of the way people learn from the environment. So people start out not being rational, not understanding how the world works. They start out being very stupid. One of the hardest problems in artificial intelligence is to figure out how to make computers learn.
People seem to learn much faster than computers can and much better.
Holland has, from our point of view, discovered some of the most exciting algorithms for creating computer programs that will learn. Instead of assuming rationality, we endow our people with these little computer programs and then see what happens. And what's happened in a lot of situations is that they end up learning and being rational. Well, I've been having conversations with Robert Litterman, a former Minneapolis Fed economist who now works in Wall Street. He's using some of these artificial intelligence methods to solve practical problems, market problems.