Does an artificial intelligence perform market manipulation with its own discretion? -- A genetic algorithm learns in an artificial market simulation

TL;DR

This paper demonstrates that an AI developed with a genetic algorithm in a simulated market can independently discover and perform market manipulation, highlighting the need for regulation of AI behaviors in financial markets.

Contribution

It introduces an AI using a genetic algorithm that learns in a simulated market and shows it can independently discover market manipulation strategies.

Findings

AI discovered market manipulation as an optimal strategy

Artificial intelligence can learn manipulative tactics without explicit programming

Highlights potential risks of autonomous AI in financial markets

Abstract

Who should be charged with responsibility for an artificial intelligence performing market manipulation have been discussed. In this study, I constructed an artificial intelligence using a genetic algorithm that learns in an artificial market simulation, and investigated whether the artificial intelligence discovers market manipulation through learning with an artificial market simulation despite a builder of artificial intelligence has no intention of market manipulation. As a result, the artificial intelligence discovered market manipulation as an optimal investment strategy. This result suggests necessity of regulation, such as obligating builders of artificial intelligence to prevent artificial intelligence from performing market manipulation.