"Abrupt rise of new machine ecology beyond human response time"...
Posted by
x (aka dmuck)
Sep 16 '13, 05:50
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"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.
As discussed recently by Vespignani1, humans and computers currently cohabit many modern social environments, including financial markets. However, the strategic advantage to a financial company of having a faster system than its competitors is driving a billion-dollar technological arms race to reduce communication and computational operating times down to several orders of magnitude below human response times -- toward the physical limits of the speed of light. For example, a new dedicated transatlantic cable18 is being built just to shave 5 milliseconds (5 ms) off transatlantic communication times between US and UK traders, while a new purpose-built chip iX-eCute is being launched which prepares trades in 740 nanoseconds (1 nanosecond is 10−9 seconds). In stark contrast, for many areas of human activity, the quickest that someone can notice potential danger and physically react, is approximately 1 second (1 s). Even a chess grandmaster requires approximately 650 ms just to realize that she is in trouble26, 27 (i.e. her king is in checkmate)."
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