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Financial instability due to model homogeneity

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Risk Domain

Risks from multi-agent interactions, due to incentives (which can lead to conflict or collusion) and/or the structure of multi-agent systems, which can create cascading failures, selection pressures, new security vulnerabilities, and a lack of shared information and trust.

"The widespread use of similar models or algorithms across the financial sec- tor can lead to synchronized reactions to market signals, increasing volatility, triggering flash crashes, or market illiquidity [4]."(p. 49)

Other risks from Gipiškis2024 (143)