My bet is that he'd lose. Beyond a certain level of knowledge, successful Jeopardy is all about hitting the buzzer first. Watson has a huge advantage in that respect because it gets the signal to buzz in electrically.
Allow both contenders to press the button within the first 2 seconds and, if they both buzz in within the 2 second window, the human answers first, because Watson could be trusted to "lock-in" it's answer.
Points are issued to whomever gets the answer right, allowing for both to receive or lose points on the same question.
Watson had a physical buzzer pusher. While he may have an advantage of reflexes, he did not do it fully electronically (obviously he 'electronically' activated the motor that pushed the button).
It's hard to say if that really makes it "unfair", since a lot of Ken Jennings' (and every other Jeopardy champion's) success was due to his reaction time with the buzzer. That's simply a huge part of the game.
On the other hand, nobody would dispute that a machine has faster reactions than a human, so maybe that makes it less interesting. Tough to figure out a great way to resolve that.
Having actually played against Watson, it certainly feels unfair when you've got a response you're 100% sure of on the tip of your tongue but you have to wait several long seconds for the question to be read. All the while you're desperately aware that Watson's reaction time is always 100 ms and yours ranges from 50-200 ms.
It is interesting to watch machines encroach on things we once considered exclusively human mental abilities. In the early days processors just multiplied large numbers faster than we could. Then they beat a grandmaster at chess and now a machine is definitely better at Jeopardy.
What is fair? Defining fair in terms of equal outcome is vacuous here.
For a bit I thought it would be more interesting to let the humans ring in as soon as they had read the question, but the problem is that today they would slaughter Watson, and three years from now Watson would slaughter them, and possibly without even updating its software.
I suppose the most fair thing to do would be to do away with the buzzer entirely. Let all players choose whether or not to answer all questions (that is, all three could get it right, all could get it wrong, one right, one abstain, one wrong, etc), and check the scores at the end. Without the buzzer advantage for Watson I suspect Jennings and Rutter still win... for another year or two, anyhow.
The way it works in Jeopardy is that after the question is read, there's a guy who flicks a switch after which the betting window is open (and there's a visual cue so the players know when this happens). If you buzz before that you get briefly locked out.
Allow both contenders to press the button within the first 2 seconds and, if they both buzz in within the 2 second window, the human answers first, because Watson could be trusted to "lock-in" it's answer.
Points are issued to whomever gets the answer right, allowing for both to receive or lose points on the same question.