Wednesday, September 11, 2013

Abrupt rise of new machine ecology beyond human response time

Here's an interesting new paper on high frequency trading, treating it as a "machine ecology" Abrupt rise of new machine ecology beyond human response time. The abstract:

Society's techno-social systems are becoming ever faster and more computer-orientated. However, far from simply generating faster versions of existing behaviour, we show that this speed-up can generate a new behavioural regime as humans lose the ability to intervene in real time. Analyzing millisecond-scale data for the world's largest and most powerful techno-social system, the global financial market, we uncover an abrupt transition to a new all-machine phase characterized by large numbers of subsecond extreme events. The proliferation of these subsecond events shows an intriguing correlation with the onset of the system-wide financial collapse in 2008. Our findings are consistent with an emerging ecology of competitive machines featuring ‘crowds’ of predatory algorithms, and highlight the need for a new scientific theory of subsecond financial phenomena.

io9 has an article about that is more approachable (I didn't read the paper), A new digital ecology is evolving, and humans are being left behind.

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