What does the Failures of Pigeons and Insider Traders tell us about AI?

In 2015, scientists trained pigeons to detect breast cancer but quickly found the pigeons failed on harder to detect cancers. In 1992, SAC Capital advisors was; in 2008, they managed 16 billion dollars in assets; in 2013 they paid over a billion in fines with eight traders convicted over insider trading charges; and in 2016 they ceased operations.

(left) Steven A. Cohen at his trading desk at his fund, S.A.C. Capital Advisors, photographed for an interview for Vanity Fair. (right) An "operant conditioning chamber" for a pigeon, trained to detect breast cancer in a study at the University of Iowa.

Both endeavors ended in failure because both endeavors tried to force non-cockpit jobs into cockpit jobs and paid the price. What are cockpit jobs? Like the job of an airline pilots, cockpit jobs are specialized roles where individuals utilize complex information and tools within a controlled environment to make critical decisions and perform precise tasks.

The key is that control: to literally cage the pigeon, and to invisibly cage the trader at their desk. Steven A. Cohen said that "My dream is to liberate myself".

It is the belief that the job of a radiologist or the job of a trader can be done in a controlled environment. However, in both the case of the pigeons and in the case of SAC, this belief was false. The jobs were not and could not be done in a controlled environment.

The pigeons proved incapable of generalizing to more difficult cases. The traders used insider information and went to jail, bringing the company down with them.

The pigeons could only make decisions based on the information given in the controlled environment. They weren't trained on any examples of the more difficult cases, so they can't classify the more difficult cases. Those cases are more difficult because they aren't similar to anything the pigeons had seen before. The real world is much more complicated than what can be presented in a controlled environment.

The insider traders were supposed to make decisions based on the information in the controlled environment. They were supposed to be in their cubicles reading articles, analyzing reports, maybe working the phone a tiny bit. Well, the traders at SAC worked the phones a lot. They extracted insider information and manipulated reports to SAC's benefits. Those traders produced superhuman returns by leaving the cockpit, going beyond to seek information and influence behavior.

The pigeons and the insider traders are both examples of how better performance in a cockpit jobs comes by redefining the cockpit. The pigeons cannot do so and do poorly. The insider traders are a little too good at it and do too good.