Blow-ups in Technology-boosted Finance
February 9, 2016 - Big Ideas
Has the Moore’s Law-driven advance in financial information technology strengthened the hand of Murphy’s Law in markets? In the January 2016 version of his paper entitled “Moore’s Law vs. Murphy’s Law in the Financial System: Who’s Winning?” Andrew Lo reviews big unintended consequences of technology-leveraged finance including fire sales, flash crashes, botched initial public offerings (IPO), catastrophic algorithmic trading errors and access failures. He then discusses the counterbalancing roles of technology in elevating and suppressing financial system risk. Based on a survey of recent financial system breakdowns and his experience, he finds that: Keep Reading