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In his article The 10 Algorithms that Dominate Our Lives George Dvorsky details the numerous avenues in which algorithms dominate our everyday lives. Whether it be using from using a google search or seeing targeted advertisements on Facebook these computerized instructions permeate almost all aspects of our digital lives. While these algorithms are usually helpful Dvorsky draws attention to one application of algorithms that seems to have dangerous potential. Recently these algorithms have infiltrated the financials sphere and are being utilized to execute what is referred to as high frequency stock trading.
And while this raises the usual ethical concerns around the replacement of human labor with automation, the dangers of automatic financial actions are more serious. Relative to humans these algorithms operate at hyperspeed and thus the sheer number of transactions is exponentially increased. Unchecked they can form a predator-prey ecosystem that can result in a downward spiral. In 2010 this culminated in a “micro-crash” where the market fell 1000 points in a matter of minutes before quickly rising again. These malfunctions are more or less harmless when talking about algorithms that fail to censor an offensive comment or an advertisement for something we would never buy but when dealing with finance the consequences are graver. These financial instruments are tied to real world assets that determine people’s livelihood. Mistakes could cost a pension or a savings fund. While there are undoubtedly countless realms where the efficiency and processing power of algorithms are invaluable and improve user experience, lack of regulation around novel financial instruments has put our country in hot water in the very recent past. I feel we should take caution in applying them to the most sensitive aspects of our lives where the risks are far greater.
Works Consulted
https://datasaurus-rex.com/uncategorized/high-frequency-trading-visualised
https://io9.gizmodo.com/the-10-algorithms-that-dominate-our-world-1580110464
https://io9.gizmodo.com/a-new-digital-world-is-emerging-thats-too-fast-for-us-1286428447