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Recent progress in artificial intelligence (AI)—a general purpose technology affecting many industries—has been focused on advances in machine learning, which we recast as a quality-adjusted drop in the price of prediction. How will this sharp drop in price impact society? Policy will influence the impact on two key dimensions: diffusion and consequences. First, in addition to subsidies and intellectual property (IP) policy that will influence the diffusion of AI in ways similar to their effect on other technologies, three policy categories—privacy, trade, and liability—may be uniquely salient in their influence on the diffusion patterns of AI. Second, labor and antitrust policies will influence the consequences of AI in terms of employment, inequality, and competition.