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The Missteps of AI Storytelling

During the creation of my book "The Mirror of Artificial Intelligence", my journey led me to engage with the fascinating historical narrative of the Alaska Purchase of 1867, as narrated by OpenAI's ChatGPT. While the narrative provided a compelling account of the event and its relation to the 'endowment effect', a cognitive bias, there were aspects of the story that left me pondering over the extent of the AI's comprehension of the concept.

Before we delve into the intricacies of AI's imperfections, read the story about Alaska Purchase in 1867:

"At the time, the United States acquired the territory of Alaska from Russia for $7.2 million, which equates to approximately 2 cents per acre. The acquisition was negotiated by Secretary of State William H. Seward, and many Americans initially criticized the purchase as a waste of money, calling it "Seward's Folly" or "Seward's Icebox."

The endowment effect played a significant role in shaping public opinion about the Alaska Purchase. When the United States acquired the territory, many Americans did not see its value and were reluctant to part with their money for what they perceived as a barren, frozen wasteland. However, this perception changed over time as people began to recognize the abundant natural resources, such as gold, timber, and fish, that Alaska had to offer.

As Americans developed a sense of ownership over Alaska, the endowment effect took hold, and the territory came to be regarded as a valuable acquisition. People's emotional attachment to the land increased, and the perceived value of the territory began to rise. The discovery of gold in the Klondike region in the late 1890s further fueled this shift in perception, as it attracted thousands of prospectors and sparked a gold rush that brought significant economic activity to the area.

The endowment effect can also be observed in the political discourse surrounding the Alaska Purchase. Initially, there were widespread doubts about the wisdom of the acquisition, but as people grew more attached to the territory, the criticisms began to fade. Eventually, the United States recognized the strategic importance of Alaska, and its abundant resources transformed the territory into a valuable part of the nation.

In conclusion, the Alaska Purchase provides a vivid illustration of the endowment effect at play. As the American people became more attached to the territory, they began to appreciate its true value, and the initial skepticism surrounding the purchase gradually transformed into pride and appreciation for this remarkable addition to the United States."


Now let's together dissect the nuances and anomalies that surface within the narrative.

The Endowment Effect Misinterpreted

To pinpoint the crux of the discrepancy, we must first delve into understanding the endowment effect itself. It is a cognitive bias that prompts individuals to overvalue items or assets they own, stemming from an emotional attachment and a perceived sense of loss in parting with the item.

The story, as presented by ChatGPT, narrated the United States' acquisition of Alaska from Russia in 1867. It suggested that the endowment effect influenced the changing American perception of the territory from a 'wasteland' to a valuable addition. However, this interpretation seems to deviate from the essential tenets of the endowment effect. The bias predominantly applies to items or assets that individuals already own, not those that they have recently acquired.

The Influence of Time

One particular aspect where the AI's story seems off-track is its neglect of the time factor in influencing public perception. The initial skepticism about Alaska was primarily due to a lack of awareness about its potential wealth, rather than a cognitive bias. The transformation in the territory's perceived value wasn't an immediate effect of the acquisition, but a gradual shift that took place over several years following the discovery of natural resources. This nuance seems to have eluded ChatGPT's understanding.

Cognitive Bias versus Collective Behavior

Another point of concern is the extrapolation of the endowment effect to the collective consciousness of an entire nation. Cognitive biases are fundamentally individual psychological phenomena. While they can influence collective behavior in certain situations, their application in the context of national decisions like the Alaska Purchase may oversimplify the complexity of such historical events.

Why AI Stumbles?

So why might these inaccuracies occur? The answer lies in the core of how AI models like ChatGPT work. They're trained on vast amounts of text data and learn to generate human-like text based on patterns they recognize in the data. While they can generate coherent and contextually relevant responses, they do not 'understand' the content in the human sense. This lack of a deeper, conceptual understanding can lead to misinterpretations or oversimplifications of complex ideas, as we've seen in the case of the endowment effect.

While AI's potential is undoubtedly immense, these instances serve as gentle reminders of the limitations that persist. As we journey onward in our exploration of artificial intelligence, it's essential to navigate these shortcomings with a discerning eye. And even as we marvel at the accuracy of AI narratives, let's also embrace these hiccups as opportunities for further refining and improving these remarkable technologies.

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