A famous story in artificial intelligence is how the US military developed algorithms to determine whether an image had a tank in it. They used a standard machine learning method: feed the computer a training set of photos, some of which had tanks in them and some of which didnt, and let algorithms identify which features in the photos correlated to tanks being shown. Since the features the computer identified were embedded in complicated mathematical equations, no one could figure out what it was really doing and therefore why it stopped working.Eventually someone realized that in the training set, all of the images with tanks were taken on a cloudy day, and all the images without tanks were taken on a sunny day. In the context of markets, it can cause companies and sectors with the right patterns to be overvalued, and ones with the wrong patterns to be undervalued.
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