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The Clone Wars are known as such because the Republic side fought with clones. Simple.

What I cannot understand is why they did this; regardless of whether it's a military och economical point of view, they are almost always less effective. It definitely costs far more to produce a clone (10 years of costly training) than to produce a droid. And when it's produced it really shouldn't be more effective in combat situations, other than when it comes to leadership. A computer (AI) should always be able to react faster than a human (except perhaps in situations such as trying to figure out a social encounter, but battle is rather straightforward); and with half-decent sensors should have better senses than a clone too.

In particular this hits me during space battles; a ship manually controlled by a clone (human) should not be able to keep up with an AI. I do know that much of the CIS droids are made to be as cheap as possible, but even with our own real-life tech we are already capable of self-steering cars that react faster and better than humans (and no matter how much the CIS save on production costs, there is no way they wouldn't at least develop a good AI since that's a one-time investment for billions of droids!) so how could the interstellar community have worse AI than we on Earth do?

If anything, I think that in any even slightly realistic world of space-farers, combat will always be done by AI since anyone not using AI would never ever keep up. And the argument that "AI might turn on us" is not very good; teaching an AI how to differentiate targets, predict trajectories, and manage weaponry/vehicles, will not teach it to think for itself enough to ever even be capable of considering rebellion. These AI would be directed and take orders from biological commanders, and thus would not need higher thoughts (if anything, wasting computing power on anything beyond direct combat would slow it down enough to make it lose against other AI that does not waste their CPU power).

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    Remember, ultimately - the Clone Wars weren't about droids vs clones - it was a 'fake' conflict generated by Darth Sideous to give him ultimate power over the Republic – NKCampbell Feb 11 at 14:43
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    "I think that in any even slightly realistic world of space-farers" - your mistake is in considering Star Wars to be even slightly realistic. – Arcanist Lupus Feb 11 at 14:46
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    @NKCampbell To be fair human drivers hit people also, a small list doesn't really do your argument justice. You would need an average of people hit against hours driven or something like that. – Warcupine Feb 11 at 15:32
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    @Valorum Many of the tasks accomplished by known droids in the Star Wars universe cannot be accomplished by a computer. – Janus Bahs Jacquet Feb 11 at 15:35
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    The droids in the Clone Wars are shown to be extremely inaccurate. I get the sense that the CIS was manufacturing cheap low-quality droids en masse, hoping to win with quantity instead of quality. Meanwhile, the Republic forces were extremely well trained but were less numerous, they were trying to win with quality over quantity. Not to mention the effect that the Jedi could have on them that can't be had on droids, for instance I'm sure they had something similar to Battle Meditation from KOTOR. This idea is also touched upon in Heir to the Empire. – DJ Spicy Deluxe Feb 11 at 16:14
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I don't know enough about the deep lore, and especially what is still considered canon and what isn't, to give a definitive answer, but I will do my best based on reasonable assumptions and things that other people have mentioned in the comments.

Simply put: The battle droids AI is not smarter than the clones.

It already has been stated that the Separatists used battle droids because they were cheap. We should discuss then what exactly it is that makes them cheap, but not so cheap that clones aren't too much more expensive. Well the AI (or OS) that operates the droids has to have been created by someone, and although it is easy to assume that the Separatists simply own the programming outright, it makes much more sense that they bought it from someone (much like buying Windows or MacOS). The installation of an OS on a regular computer usually requires you to purchase each install license or a set of install licenses, even for large company contracts. The founding members of the Separatists were the Trade Federation, so their entire basis was around sale of goods and services, and believed that the Republic had become corrupted and was interfering with their right to conduct business as they see fit. Therefore, they would never force one of their member systems (or a company/organization within) to authorize the usage of their intellectual property for free.

With these little bits of knowledge I think it makes complete sense that they would have opted for the cheapest AI license they could get for what originally amounted to no more than cheap private army for the purpose of bullying competitors and small systems. As the war got more and more serious they needed to construct more capable battle droids, and thus super battle droids were introduced. However, they were more expensive to produce and to license the more advanced AI. To supplement they also created tactical droids to think more intuitively, however those were far far more expensive to license the AI, and they were not built for battle as they were never intended to fight anyway.

At this point, clones begin to seem a lot more reasonable as they could maintain fighting abilities on par with even the super battle droids, while also possessing great mental capabilities, that do not necessarily meet the tactical droids (because of processing speed), but are far superior to any battle droid. Those capabilities would be present in every single soldier, rather than only in specifically designed units.

That leads to the simple argument of tactical soldiers versus untrained militia. True, the battle droids are programmed for combat, but they aren't programmed for tactics, they are programmed for orders and accuracy. Therefore, I will compare them to a militia force, because although they have the numbers, an individual unit has very little ability to make complex combat decisions other than point and shoot. Battle droids have to be told by either a tactical droid or a sentient being to build fortifications or setup an ambush or to change the plan of attack mid-fight; clones can do all that on an individual basis at any time.

As for the starfighter aspect of the question, one could argue that many republic starfighters use astro-mech droids to assist pilots, which are easily a far superior AI to almost everything as far as I can tell. That said, I might agree that the droids should have a distinct advantage, which is portrayed somewhat in the opening battle of Episode 3, but since dogfighting style space combat is clearly the standard in star wars, it may be something along similar veins to the above statements. That one gets a bit more into Star Wars very heavy handwavium.

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I think your premise is wrong.

Star Wars computers don't appear to be able to react faster than a human

All the machine intellignce we've seen appears to have similar capabilities to living creatures. Droids are not superfast, they don't do billions of calculations per second, they don't display amazing reaction speed. They are just "people" in metal skin.

The big starships have crews of people driving them and firing their weapons; not AIs targeting and destroying foes. Small starships piloted by droids turn and bank and react at pretty much the same speed as sentinet creature crewed vessels.

Either the machines are not actually capable of fast action or they are arbitrarily limited by the humans.

Or, more likely, the authors of the stories choose to make everything human-focused. A story is not much fun if an AI wins the big star battle in 0.45 milliseconds.

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How could the clones ever keep up with droids, especially in space dogfights?

In space dogfights, the droids would still be limited by their technology. If the spacecraft of the clones was of a superior design than that of the droids, it does not matter if the droid AI was more "intelligent" than the clone pilots. In an inferior craft, weaknesses can be exploited by a competent clone pilot. This would also apply to any technology developed for ground combat.

Also, keep in mind that an AI still has to somehow learn how to combat whatever technology is being used against it. So at least in the early encounters against new technology, the AI would be at a disadvantage since it was not yet fully familiar with the capabilities of the technology that it was facing, and would have to learn. Obviously, it is more difficult to learn if they are being blown up.

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