Friday, May 7, 2010

Modern mysteries confound

Our world is filled with technology that we strain to understand. Our systems have become so complex and so sophisticated, that we observe their behavior but cannot always explain it.



My wife and I were discussing the stock market behaviors, idly. She noted that all the information should be available: the stock exchanges know which parties made which trades at which times for what prices. This is true, but we don't know why those trades were made. Even the exchanges aren't sure about some of these trades, and apparently have cancelled some trades? And, in many (the majority?) of the trades, the parties were not humans, making decisions for human reasons, but computerized trading algorithms, making decisions based on their programming, and doing so at the speed of machines.

You can't sub-poena a trading algorithm and demand that it explain its reasoning.

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