Artificial intelligence (AI) is making a computer that thinks like a human (or eventually better) - to be able to learn and to have new ideas. AI does not mean to make a computer smart just by knowing more information. It is to build a machine that can act as if it were smart and seem more human. This is called the Turing test.
Computers are very good at following exact orders, and handling very specific things, but not good at dealing with new things they haven't seen before. For example, a common computer program can turn a report of names and hours worked into paychecks for the workers at a company. But the same program could not answer questions from an employee about why the company will not pay for nap time. That is the difference between a program and AI.
In some cases, AI can be simulated (imitated), at least in certain areas. With enough effort, programmers can make a big program that knows about many things and can answer questions about those things. Programs that can beat humans at chess have been around for a long time, but that's not true AI, it's just a very good program on how to follow strategy to win at chess. If simulated AI is asked about something it does not know, it cannot come up with a good answer based on other things it already knows. For example, it might know the weather forecast, and about how plants grow, but if asked if the grass will be green next week, simulated AI will not ever realize it needs to think about what the temperature and rainfall will be for the next week. A true AI program will be able to understand how to answer new questions like that.
To work in a world where answers are not yes or no but also maybe, likely and not likely, researchers have worked on fuzzy logic and neural networks.
Sometimes, AI is meant to be a simulation of human intelligence, often as a part of research in the area of psychology. In this case, it is the study of mental processes through the use of computer models. The question of what it means to be self-aware or having consciousness (knowing that you have a physical body, and how you think about your self) is part of it. If a computer sees itself in a mirror, would it realize what it sees? Can a computer be scared of death?
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