As albertni suggests, they have a series of heuristics, some of which do word matching and others which are specialized to common Jeopardy idioms -- such as the before-and-after clue. Each heuristic gives a list of candidate answers and probabilities, and Watson replies with the highest-probability answer, if its certainty is high enough.
How does Watson "know" with high probability to apply the before-and-after heuristic in this instance? Because the category is explicitly "Before and After", assuming they're recycling the clues from the following show:
(I see a wag on a discussion board suggested "Pay Day O'Connor" as an alternate solution, which is awesome. Curiously, Watson had the same solution as the contestant that day; Alex seemed to be expecting "Baby Ruth Bader Ginsburg".)
So, no, Watson probably wouldn't do too well on cryptics, but a similar approach with the right set of heuristics would probably work.
That's probably better than the typical contestant who simply has categorical weak spots like sports or opera. Although not being able to grok audio or picture clues on top of that would be a real problem.
Every season has more clever, non-traditional categories to make Jeopardy! more playful. For example, it wouldn't be unusual to have a category like "Monopoly Colors," where responding to a Daily Double clue of "The $1 Bill" with "green" could be catastrophic.
This seems really fun, though. I'm very glad to see this kind of high-profile project that has the potential to rouse the curiosity of potential computer scientists.
How does Watson "know" with high probability to apply the before-and-after heuristic in this instance? Because the category is explicitly "Before and After", assuming they're recycling the clues from the following show:
http://www.j-archive.com/showgame.php?game_id=3258
(I see a wag on a discussion board suggested "Pay Day O'Connor" as an alternate solution, which is awesome. Curiously, Watson had the same solution as the contestant that day; Alex seemed to be expecting "Baby Ruth Bader Ginsburg".)
So, no, Watson probably wouldn't do too well on cryptics, but a similar approach with the right set of heuristics would probably work.