{"id":8349,"date":"2012-02-18T22:43:44","date_gmt":"2012-02-18T21:43:44","guid":{"rendered":"http:\/\/www.limbicnutrition.com\/blog\/?p=8349"},"modified":"2023-01-06T10:09:55","modified_gmt":"2023-01-06T09:09:55","slug":"algorithm-wars-and-ultrafast-machine-ecologies","status":"publish","type":"post","link":"https:\/\/www.limbicnutrition.com\/blog\/algorithm-wars-and-ultrafast-machine-ecologies\/","title":{"rendered":"Algorithm wars and ultrafast machine ecologies"},"content":{"rendered":"<p>In an amazing 2011 TED talk, Kevin Slavin explained how \u201calgorithms shape our world\u201d.<\/p>\n<div style=\"max-width: 854px;\">\n<div style=\"position: relative; height: 0; padding-bottom: 56.25%;\"><iframe loading=\"lazy\" style=\"position: absolute; left: 0; top: 0; width: 100%; height: 100%;\" src=\"https:\/\/embed.ted.com\/talks\/lang\/en\/kevin_slavin_how_algorithms_shape_our_world\" width=\"854\" height=\"480\" frameborder=\"0\" scrolling=\"no\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/div>\n<\/div>\n<p>Its well worth a watch to prepare you for the the main part of this post, an analysis of Black Swan events\u00a0 in financial markets caused by exactly the sort of algorithms Slavin describes.<\/p>\n<p>From \u201c<a href=\"http:\/\/arxiv.org\/abs\/1202.1448\">Financial black swans driven by ultrafast machine ecology<\/a>\u201d:<\/p>\n<blockquote><p>Society&#8217;s drive toward ever faster socio-technical systems, means that there is an urgent need to understand the threat from &#8216;black swan&#8217; extreme events that might emerge. On 6 May 2010, it took just five minutes for a spontaneous mix of human and machine interactions in the global trading cyberspace to generate an unprecedented system-wide Flash Crash. However, little is known about what lies ahead in the crucial sub-second regime where humans become unable to respond or intervene sufficiently quickly. Here we analyze a set of 18,520 ultrafast black swan events that we have uncovered in stock-price movements between 2006 and 2011. We provide empirical evidence for, and an accompanying theory of, an abrupt system-wide transition from a mixed human-machine phase to a new all-machine phase characterized by frequent black swan events with ultrafast durations (&lt;650ms for crashes, &lt;950ms for spikes). Our theory quantifies the systemic fluctuations in these two distinct phases in terms of the diversity of the system&#8217;s internal ecology and the amount of global information being processed. Our finding that the ten most susceptible entities are major international banks, hints at a hidden relationship between these ultrafast &#8216;fractures&#8217; and the slow &#8216;breaking&#8217; of the global financial system post-2006. More generally, our work provides tools to help predict and mitigate the systemic risk developing in any complex socio-technical system that attempts to operate at, or beyond, the limits of human response times.<\/p><\/blockquote>\n<p>As a great friend of mine, who happens to be a banker who is very senior in the markets, once commented to me by mail, talking about how trading was accelerating into millisecond cascades as described by this paper:<\/p>\n<blockquote><p>slow the fck down everyone<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>In an amazing 2011 TED talk, Kevin Slavin explained how \u201calgorithms shape our world\u201d. Its well worth a watch to prepare you for the the main part of this post, an analysis of Black Swan events\u00a0 in financial markets caused by exactly the sort of algorithms Slavin describes. From \u201cFinancial black swans driven by ultrafast &#8230; <a title=\"Algorithm wars and ultrafast machine ecologies\" class=\"read-more\" href=\"https:\/\/www.limbicnutrition.com\/blog\/algorithm-wars-and-ultrafast-machine-ecologies\/\" aria-label=\"Read more about Algorithm wars and ultrafast machine ecologies\">Read more<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[32,34,11,14,22],"tags":[300,296],"class_list":["post-8349","post","type-post","status-publish","format-standard","hentry","category-business","category-contemporary-culture","category-miscellaneous","category-philosophy","category-tech-internet","tag-processed","tag-published"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/prY0k-2aF","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":16994,"url":"https:\/\/www.limbicnutrition.com\/blog\/me-machine-by-bruce-riley-2015\/","url_meta":{"origin":8349,"position":0},"title":"Me Machine by Bruce Riley (2015)","author":"Limbic","date":"January 2, 2016","format":false,"excerpt":"\"Me Machine\" by Bruce Riley (2015) via Flickr","rel":"","context":"In &quot;Art, Architecture &amp; Design&quot;","block_context":{"text":"Art, Architecture &amp; Design","link":"https:\/\/www.limbicnutrition.com\/blog\/category\/humanities\/art\/"},"img":{"alt_text":"2015-10_10_Me_Machine02713","src":"https:\/\/i0.wp.com\/www.limbicnutrition.com\/blog\/wp-content\/uploads\/2016\/01\/22916228614_f057c74f6f_z.jpg?resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.limbicnutrition.com\/blog\/wp-content\/uploads\/2016\/01\/22916228614_f057c74f6f_z.jpg?resize=350%2C200 1x, https:\/\/i0.wp.com\/www.limbicnutrition.com\/blog\/wp-content\/uploads\/2016\/01\/22916228614_f057c74f6f_z.jpg?resize=525%2C300 1.5x"},"classes":[]},{"id":26835,"url":"https:\/\/www.limbicnutrition.com\/blog\/the-unconscious-a-machine-for-operating-an-animal\/","url_meta":{"origin":8349,"position":1},"title":"The Unconscious: A machine for operating an animal","author":"Limbic","date":"June 24, 2017","format":false,"excerpt":"There is a wonderful article on language and the unconscious in Nautilus magazine written by author Cormack McCarthy. It answers the mystery of why the unconscious \"speaks\" to us in symbols and\u00a0images instead of just using words. He calls it the Kekul\u00e9 problem: \"Among the myriad instances of scientific problems\u2026","rel":"","context":"In &quot;Anthropology&quot;","block_context":{"text":"Anthropology","link":"https:\/\/www.limbicnutrition.com\/blog\/category\/science\/anthropology\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":16872,"url":"https:\/\/www.limbicnutrition.com\/blog\/openai\/","url_meta":{"origin":8349,"position":2},"title":"OpenAI","author":"Limbic","date":"December 15, 2015","format":false,"excerpt":"A bulge is forming in the distribution of the future. From the NY Times: A group of prominent Silicon Valley investors and technology companies said on Friday that they would establish an artificial-intelligence research center to develop \"digital intelligence\" that will benefit humanity. The investors \u2014 including Elon Musk, Peter\u2026","rel":"","context":"In &quot;Miscellaneous&quot;","block_context":{"text":"Miscellaneous","link":"https:\/\/www.limbicnutrition.com\/blog\/category\/miscellaneous\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":8175,"url":"https:\/\/www.limbicnutrition.com\/blog\/robots-and-software-really-are-eating-jobs\/","url_meta":{"origin":8349,"position":3},"title":"Robots and software really are eating jobs","author":"Limbic","date":"November 7, 2011","format":false,"excerpt":"Following on from my post last night (\"Robots and the Chinese\"), I received a great link in the mail this morning. From the Economist, \"Difference Engine: Luddite legacy\": But here is the question: if the pace of technological progress is accelerating faster than ever, as all the evidence indicates it\u2026","rel":"","context":"In &quot;Business, Economics &amp; Finance&quot;","block_context":{"text":"Business, Economics &amp; Finance","link":"https:\/\/www.limbicnutrition.com\/blog\/category\/business\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":16829,"url":"https:\/\/www.limbicnutrition.com\/blog\/jon-ronson-on-social-media-shaming\/","url_meta":{"origin":8349,"position":4},"title":"Jon Ronson on Social Media Shaming","author":"Limbic","date":"October 10, 2015","format":false,"excerpt":"From Jon Ronson's TED talk \"How our real lives can be ruined by our digital ones\" Transcript from Jon Ronson on TED Radio hour's Screen Time part 2: \"I think for other people, it's because Twitter is basically a mutual approval machine. We surround ourselves with people who feel the\u2026","rel":"","context":"In &quot;Miscellaneous&quot;","block_context":{"text":"Miscellaneous","link":"https:\/\/www.limbicnutrition.com\/blog\/category\/miscellaneous\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3586,"url":"https:\/\/www.limbicnutrition.com\/blog\/ah-pook-is-here-by-william-s-burroughs-phillip-hunt-film\/","url_meta":{"origin":8349,"position":5},"title":"Ah Pook is Here by William S. Burroughs (Phillip Hunt film)","author":"Limbic","date":"October 13, 2005","format":false,"excerpt":"Superb short film by Phillip Hunt. Narration by William S. Burroughs. Music by JJ. Cale. Transcript after the Jump When I become Death, Death is the seed from which I grow\u2026 Itzama, spirit of early mist and showers. Ixtaub, goddess of ropes and snares. Ixchel, the spider web, catcher of\u2026","rel":"","context":"In &quot;News&quot;","block_context":{"text":"News","link":"https:\/\/www.limbicnutrition.com\/blog\/category\/news\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.limbicnutrition.com\/blog\/wp-json\/wp\/v2\/posts\/8349","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.limbicnutrition.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.limbicnutrition.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.limbicnutrition.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.limbicnutrition.com\/blog\/wp-json\/wp\/v2\/comments?post=8349"}],"version-history":[{"count":0,"href":"https:\/\/www.limbicnutrition.com\/blog\/wp-json\/wp\/v2\/posts\/8349\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.limbicnutrition.com\/blog\/wp-json\/wp\/v2\/media?parent=8349"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.limbicnutrition.com\/blog\/wp-json\/wp\/v2\/categories?post=8349"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.limbicnutrition.com\/blog\/wp-json\/wp\/v2\/tags?post=8349"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}