Gary Gensler has been worrying about this, and calling for extra regulation, but the arguments behind his view are not so strong. Here is one part from my latest Bloomberg column: One fear is that a small number of AI base models could lead investors to herd behavior, where many of them sell (or buy) at the
The post Will AI cause a market crash/ appeared first on Marginal REVOLUTION.
Gary Gensler has been worrying about this, and calling for extra regulation, but the arguments behind his view are not so strong. Here is one part from my latest Bloomberg column:
One fear is that a small number of AI base models could lead investors to herd behavior, where many of them sell (or buy) at the same time because their models have told them to. But the number of base models is likely to rise over time, not fall. AI is in a period of considerable innovation, with many startups being founded and many new trading and investing techniques being developed. Diversity, not uniformity, will reign.
The incentives of a trading firm are not to use the same model as everyone else, as that could lead them to sell into falling market panics or buy into temporarily rising prices — which is precisely what they should not do. Instead, a top trading firm will try to develop better models than its competitors. If a firm discovers that competitors are using a common model in a predictable way, it can identify the weaknesses of that model and trade against those firms.
There is much more at the link.
The post Will AI cause a market crash/ appeared first on Marginal REVOLUTION.
Economics, Web/Tech