An increasing number of decisions that used to be made by humans and now made by algorithms. What is an algorithm? The simple summary is that it is a list of “if then” scenarios programmed into some software that tells a another piece of software or device what to do when any particular scenario presents itself. Algorithms take each input and decide which output will be produced.
The stock market is subject to an enormous number of algorithms set by an enormous number of investors. However, we know that algorithms can be subject to dramatic error such as what has become known as the flash crash (May 6, 2010) which resulted in $1 trillion of value disappearing in a few minutes. Separately, on August 1, 2012, Knight capital lost $440 million in 45 minutes when one of its algorithms triggered a sequence of incorrect trades.
Algorithms are common in almost every field including medicine, sports and music. Algorithms are deciding what we see and don’t see, what we hear and do here and therefore are directly influencing the decisions we make by presenting a limited number of options based on what the algorithm thinks we want. Therefore, the algorithms are in fact shaping our entire culture and society.
Algorithms make critical security decisions, employment decisions and even search musical talent and determine which musicians are more likely to produce music that the algorithm thinks specific people will be interested in. The question is, would such an algorithm have discovered your current favorite musicians or bands? Or to be more general, is the use of algorithms a good thing?
That answer is that some algorithms are in fact probably good while others are bad.
Next article in this series: “Humanity Advances Through Disagreement”