March of the Robo-Traders

This report from The Economist contains the following excerpt:

“Beyond worries over market stability, might an even greater danger be lying in wait? Mr Hooper proposes a doomsday scenario. Some day, advances in natural-language processing and statistical analysis might lead to robo-traders capable of analysing news feeds, deciding which shares to buy and sell, and devising their own strategies. Given that companies are very keen to patent their algorithms, it is quite possible that just one company could then emerge as the victor in this algorithmic arms race, says Mr Hooper. This outcome would create a particularly challenging problem for regulators. “It is a possibility that you could have an unfair advantage and there would be nothing governments could do about it,” he says. It is an interesting idea. But it seems unlikely, since there are so many possible trading strategies, and unlike simpler problems in computing (such as sorting a list) it is doubtful that there will turn out to be a single trading algorithm that outperforms all others. Yet perhaps such a suggestion should not come as a surprise. For whenever robots are being discussed–even if they are merely the software-based, share-trading variety–the idea that humans will lose their jobs and the robots will take over the world always seems to be lurking in the background.”

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