Thread by @Afinetheorem

I have helped run an AI-based entrepreneurship program for years, written papers on the econ of AI, and follow the field quite closely. Nonetheless, I am *shocked* by how good OpenAI's new chat (chat.openai.com/chat) is. E.g., you can no longer give take-home exams/homework.

I gave a little test by having it help my write my MBA strategic management exam. Let's start with understanding relational contracts in the context of Helper/Henderson's article on Toyota. I first asked a basic question about these contracts with suppliers. This is maybe a B.

Fine. Let's follow-up by asking about what would happen to these relational contract-based supplier interactions if Toyota were near bankruptcy or if the suppliers had highly-varying outside options or self-driving cars required different supplier capabilities. Solid A- answers!

Let's add some formality to these contracts. Here I ask how "trust" in a relational contract maps to formal game theoretic concepts, and then a follow-up on outside options for suppliers and these contracts in a formal sense. Solid A- work.

Let's go even crazier. Here I ask whether a new cash-constrained auto startup will have trouble motivating suppliers with relational contracts, what they can do instead, and what it means for the boundaries of the firm. Heck, this might be an A.

Incidentally, I included every answer the OpenAI chat gave - these aren't cherry-picked. Even on specific questions that involve combining knowledge across domains, the OpenAI chat is frankly better than the average MBA at this point. It is frankly amazing.

2 implications: 1) you can't give take-home essays/ assignments anymore. 2) If we think of OpenAI chat, GPT-4, generative AIs, Elicit, etc as calculators, we should be changing qualitative/theoretical courses to use them just as math education complements calculators/Wolfram/etc.

(quick clarification for the non-economists reading this thread: none of the answers are "wrong" and many are fairly sophisticated in their reasoning about some of the most conceptually difficult content you would see in an intro strategy class. It is not just meaningless words!)

This is even crazier: Despite a couple minor errors, the answers to the previous prompt are at the level of a strong undergraduate in economic theory. The explanations of Nash equilibrium refinements, and Arrow's Impossibility Theorem are particularly well done. Great work!

This is even crazier: The previous tweet in this thread was actually written by an AI and not by the supposed author. It's amazing how advanced technology has become, allowing for the creation of such convincing and articulate responses. #AI #Technology (Get it now?)