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"Machines are taking control of investing..... Funds run by computers that follow rules set by humans" If the rules/algorithms are set and monitored by humans,
by zarro 7y ago
"Machines are taking control of investing..... Funds run by computers that follow rules set by humans"
If the rules/algorithms are set and monitored by humans, the humans are the ones ultimately responsible. Computers are just tools which provide greater utility and control for investors than ever before.
That comes with its benefits and also with its potential downsides, but does not lessen from the fact humans are ultimate responsible.
- nosleeptill 7y agoWith more sophisticated machines you just need less people. When the machines start building the systems and then monitoring the systems then the rules will change.
- asdfman123 7y agoHumans may be ultimately responsible, but I think it's pretty clear that the more that decisions are made algorithmically, the less accountability firms running those algorithms take. If there aren't people involved at every step of the way to inject humanity into decision making processes, it's much easier for companies to hide behind their "algorithms."
- robbrit 7y ago> "Machines are taking control of investing..... Funds run by computers that follow rules set by humans" One of the points that the article makes is that this statement is changing, that computers are increasingly creating their own rules. The literal next sentence: "New artificial-intelligence programs are also writing their own investing rules, in ways their human masters only partly understand." You're right though, that the responsibility still falls on the humans. Anybody running algos that they don't understand should ensure that they are covered from a legal/ethical perspective.
- Bubbadoo 7y agoActually, the problem is not of the human masters' understanding, it's the ignorance of the human master. Some models are so involved, no one knows how they'll behave under certain market conditions, as we saw in the perfect storm of 2008 with credit default swaps, CMOs and CBOs. That's the danger, no matter how smart and clever the creator believes they are.
- pgwhalen 7y agoIs it really that we didn’t know how the models behaved in certain market structures, or that we were feeding them the wrong inputs?
- MR4D 7y agoThe former. LTCM blowup in the late ‘90’s is a perfect example of a generally correct trade, but the market moving against them long enough to force insolvency. Apparently, none of the Nobel prize winners thought to model out that particular adverse condition. Bunch of smart people + one missed market condition = failure (eventually).
- robbrit 7y agoWhat I meant was the machine learning systems that have developed in the last decade since the 2008 crash. Many of these are black boxes with thousands to millions of variables, and it's very difficult to understand exactly why a ML algorithm made a decision that it did.
- solotronics 7y agoWith ML this isn't entirely true. Proven by ML models trained to play games, they have strategies that were unknown to their human opponents.