ROBOTS can make more cash than people when they trade commodities, according
to Jeffrey Kephart at IBM鈥檚 research centre in Hawthorne, New York.
Kephart says his team鈥檚 findings could have a much greater impact than the
famous victory of IBM鈥檚 Deep Blue supercomputer over chess supremo Gary
Kasparov. 鈥淭he impact might be measured in billions of dollars annually,鈥� he
says.
A commodities trader buys and sells goods, which are usually agricultural or
mineral-based, like pork bellies or gold. Their aim is to buy low and sell high.
While robotic trading agents have been entered in competitions before, they had
never competed against people.
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In IBM鈥檚 test, software-based robotic trading agents鈥攌nown as
鈥渂ots鈥濃�攎ade seven per cent more cash than people. Both bots and people had
the same set-up, allowing them to trade through an unbiased software-based
auctioneer. The auction was designed to mimic the kind of commodities market
where buyers and sellers have a fixed amount of time to trade in a single
commodity.
Six bots and six people traded against each other. Half were buyers and half
were sellers. Buyers were given an upper spending limit, while sellers had a
minimum sale price. Their goal was to maximise their profit at the end of
trading.
The bots used very basic strategies. Some tried to make better offers
incrementally, in the hope that they could strike a deal, while a more
successful version tried to work out the best price to trade at, by calculating
its probability of success based on the form.
Back in Britain, Dave Cliff, a researcher at Hewlett-Packard鈥檚 research labs
in Bristol who developed one of the trading algorithms used in IBM鈥檚 experiment,
described their finding as 鈥渟ignificant鈥�. 鈥淚 never designed it to outperform
humans, so for me it鈥檚 a very pleasant surprise that it does,鈥� says Cliff.
鈥淚f it were up against the Gary Kasparov of trade I would guess that that
person would beat these agents,鈥� Kephart says. But he points out that these
early robotic agents were very simple indeed.
Kephart believes that in the future billions of economic robotic agents will
replace people in making these sorts of financial decisions on behalf of
businesses. 鈥淲e see agents being down there in the frenzy of the trading pit
while humans are elevated to a more managerial role,鈥� he says.
