Tuesday, February 28, 2012  Weird stuff in high frequency
markets          The Economist reports an interesting related
story.       1. High Frequency is a zero sum game if all hf
traders are trading with each other. But since HF as a whole is
trading with other low frequency traders, it is a high expected
value game.    2. "I am reminded of work in game theory in which
computer programs fight out the prisoner's dilemma and all sorts
of weird stuff erupts."      What like cooperation being the
dominant strategy? Why is that "weird"?      Timothy Watson
1. I believe he might be referring to the "Iterated Prisoners
Dilemma Competition," which is a yearly programming/game theory
challenge. I think it was Bob Axelrod who started it.
Anyways, tit-for-tat won every years for two decades. Recently a
group brilliantly beat the system by encoding a signal through
which their programs could locate eachother in the game and
cooperate, building up one program to be the best.        It's a
pretty impressive li