Alex Preda
- Published in print:
- 2017
- Published Online:
- September 2017
- ISBN:
- 9780226427348
- eISBN:
- 9780226427515
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226427515.003.0001
- Subject:
- Business and Management, Finance, Accounting, and Banking
The Introduction presents the main puzzle of the book: why do ordinary people take up trading when statistical evidence shows that a vast majority of them do not make any money? Starting with an ...
More
The Introduction presents the main puzzle of the book: why do ordinary people take up trading when statistical evidence shows that a vast majority of them do not make any money? Starting with an argument initially made in financial theory, namely that markets need “noise” in order to work, it asks, How does this “noise” look like in practice? It introduces the distinction between informed or professional traders, on the one hand, and noise or retail traders, on the other hand, and questions it from a sociological point of view. The Introduction shows how the meaning of the financial concept of “noise” has changed over decades, to designate a particular category of traders as distinct from professional ones. This raises the issue of how various categories of traders are constituted, how they relate to each other, and how such links can be investigated within electronic markets. The Introduction lays out the ethnographical approach to investigating categories and types of traders, in relationship to the institutions which support trading. It argues that the ethnography of electronic trading and of retail traders cannot be limited to online exchanges, but needs to take into account the manifold institutions and interactions which constitute markets.Less
The Introduction presents the main puzzle of the book: why do ordinary people take up trading when statistical evidence shows that a vast majority of them do not make any money? Starting with an argument initially made in financial theory, namely that markets need “noise” in order to work, it asks, How does this “noise” look like in practice? It introduces the distinction between informed or professional traders, on the one hand, and noise or retail traders, on the other hand, and questions it from a sociological point of view. The Introduction shows how the meaning of the financial concept of “noise” has changed over decades, to designate a particular category of traders as distinct from professional ones. This raises the issue of how various categories of traders are constituted, how they relate to each other, and how such links can be investigated within electronic markets. The Introduction lays out the ethnographical approach to investigating categories and types of traders, in relationship to the institutions which support trading. It argues that the ethnography of electronic trading and of retail traders cannot be limited to online exchanges, but needs to take into account the manifold institutions and interactions which constitute markets.
Michael Abramowicz
- Published in print:
- 2008
- Published Online:
- October 2013
- ISBN:
- 9780300115994
- eISBN:
- 9780300144956
- Item type:
- chapter
- Publisher:
- Yale University Press
- DOI:
- 10.12987/yale/9780300115994.003.0001
- Subject:
- Economics and Finance, Economic Systems
This chapter suggests that prediction markets can provide objective gauges of expert consensus for the media to pass along to the public. Experience suggests that prediction markets are generally ...
More
This chapter suggests that prediction markets can provide objective gauges of expert consensus for the media to pass along to the public. Experience suggests that prediction markets are generally fairly accurate, and, at least, they provide incentives for those who could beat the market to push predictions in a sensible direction. The chapter describes a relatively simple structure for a prediction market that can be used to estimate the probability that a particular event will occur. After recounting the experiences of perhaps the most famous prediction market, the nonprofit Iowa Electronic Markets (IEM), the chapter elaborates a more general type of numeric prediction market that the IEM also uses. The chapter also argues that prediction markets offer considerable advantages and also present unique challenges. The chapter suggests how the media might use prediction markets to provide better information to readers and viewers.Less
This chapter suggests that prediction markets can provide objective gauges of expert consensus for the media to pass along to the public. Experience suggests that prediction markets are generally fairly accurate, and, at least, they provide incentives for those who could beat the market to push predictions in a sensible direction. The chapter describes a relatively simple structure for a prediction market that can be used to estimate the probability that a particular event will occur. After recounting the experiences of perhaps the most famous prediction market, the nonprofit Iowa Electronic Markets (IEM), the chapter elaborates a more general type of numeric prediction market that the IEM also uses. The chapter also argues that prediction markets offer considerable advantages and also present unique challenges. The chapter suggests how the media might use prediction markets to provide better information to readers and viewers.
Helga Drummond
- Published in print:
- 1996
- Published Online:
- October 2011
- ISBN:
- 9780198289531
- eISBN:
- 9780191684722
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198289531.003.0005
- Subject:
- Business and Management, Organization Studies, HRM / IR
Committees are a way of life in London. When the thirteen members of Siscot began arriving at Cazenove's in Tokenhouse Yard in November 1988, they expected that, like the First World War, it would ...
More
Committees are a way of life in London. When the thirteen members of Siscot began arriving at Cazenove's in Tokenhouse Yard in November 1988, they expected that, like the First World War, it would all be over by Christmas. However, Siscot was locked in conflict from the start. The London Stock Exchange's (LSE) cherished dream was to create a superb electronic market-place. Settlement was an integral part of the vision of an electronic factory producing ‘safely completed trades’. Unfortunately for the LSE, other organizations in the securities industry had similar ideas. By what right, they demanded, did the Stock Exchange as central market authority compete with its own member firms? The controversy dominated the early meetings of Siscot. The clearing banks demanded to know who would own Project Taurus. The institutions were determined that whoever owned settlement, it would not become the property of the clearing banks.Less
Committees are a way of life in London. When the thirteen members of Siscot began arriving at Cazenove's in Tokenhouse Yard in November 1988, they expected that, like the First World War, it would all be over by Christmas. However, Siscot was locked in conflict from the start. The London Stock Exchange's (LSE) cherished dream was to create a superb electronic market-place. Settlement was an integral part of the vision of an electronic factory producing ‘safely completed trades’. Unfortunately for the LSE, other organizations in the securities industry had similar ideas. By what right, they demanded, did the Stock Exchange as central market authority compete with its own member firms? The controversy dominated the early meetings of Siscot. The clearing banks demanded to know who would own Project Taurus. The institutions were determined that whoever owned settlement, it would not become the property of the clearing banks.
Alex Preda
- Published in print:
- 2017
- Published Online:
- September 2017
- ISBN:
- 9780226427348
- eISBN:
- 9780226427515
- Item type:
- book
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226427515.001.0001
- Subject:
- Business and Management, Finance, Accounting, and Banking
This book examines the institutional and cultural underpinnings of a financial puzzle: given that the overwhelming majority of retail traders lose money in financial transactions, why do we see ...
More
This book examines the institutional and cultural underpinnings of a financial puzzle: given that the overwhelming majority of retail traders lose money in financial transactions, why do we see ordinary people continuing to engage in trading? This phenomenon is analyzed by means of an ethnographic investigation of how electronic financial markets work. The book takes the perspective of the relationships among retail traders, institutional traders, and brokers. “Noise” investigates the social institutions that recruit ordinary people and support their participation into financial trading. Contrary to widespread assumptions, the book shows that professional and retail traders are not two completely separated categories. It analyzes how transitions are made between them, as intrinsic to reproducing the financial workforce. Based on direct observations and interviews with traders and brokers in the US and the UK, the book takes a close up look at the practical actions of trading, and at how these relate to the brokers’ actions. Using extensive interviews with traders, “Noise” sheds light on the rationales for taking up trading and continuing with it even if little or no gains are made. It shows how traders make sense of their financial actions and decisions in relationship to their social lives, challenging a utilitarian view about profit as the ultimate motive in trading.Less
This book examines the institutional and cultural underpinnings of a financial puzzle: given that the overwhelming majority of retail traders lose money in financial transactions, why do we see ordinary people continuing to engage in trading? This phenomenon is analyzed by means of an ethnographic investigation of how electronic financial markets work. The book takes the perspective of the relationships among retail traders, institutional traders, and brokers. “Noise” investigates the social institutions that recruit ordinary people and support their participation into financial trading. Contrary to widespread assumptions, the book shows that professional and retail traders are not two completely separated categories. It analyzes how transitions are made between them, as intrinsic to reproducing the financial workforce. Based on direct observations and interviews with traders and brokers in the US and the UK, the book takes a close up look at the practical actions of trading, and at how these relate to the brokers’ actions. Using extensive interviews with traders, “Noise” sheds light on the rationales for taking up trading and continuing with it even if little or no gains are made. It shows how traders make sense of their financial actions and decisions in relationship to their social lives, challenging a utilitarian view about profit as the ultimate motive in trading.
Nir Vulkan and Chris Preist
- Published in print:
- 2013
- Published Online:
- January 2014
- ISBN:
- 9780199570515
- eISBN:
- 9780191765957
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199570515.003.0018
- Subject:
- Economics and Finance, Financial Economics
Organisations and individuals trading in electronic markets are increasingly using automated agents. Agents are particularly useful in markets where trade might not otherwise have been possible, for ...
More
Organisations and individuals trading in electronic markets are increasingly using automated agents. Agents are particularly useful in markets where trade might not otherwise have been possible, for example because a lot of information must be processed quickly, or because employing human traders in 24-hour, small transaction markets is not cost-effective. Markets for communication bandwidth, where organisations trade the rights to transmit data over a network, are one such application. Because demand fluctuates considerably every few seconds, agent-based spot markets provide extra liquidity. In order for such markets to work effectively, it is necessary to provide users with agents that can represent and maximise the goals of the organisations using them. This is a hard problem. This chapter provides general principles and examples of good algorithms, based on our research in this area and on our work on designing agents and markets for trading communication bandwidth — some of which on behalf of HP labs. The contribution of our approach is threefold: First, the chapter provides a definition for what a ‘good’ trading agent is. Second, the chapter discusses how to design an interface where users can easily and effectively communicate their preferences to the agents. Clearly, if users can not do that, then this will limit both their incentives to use such technologies and the benefits of what they can achieve when they so. Third, the chapter shows how to design adaptive agents based on ideas from statistical decision theory. In particular our agents are designed to differentiate stable from unstable market conditions and to best respond to these changes. The chapter describes simulation results which show that our design performs well in a large number of trading environments which tries to capture what real markets trading is like.Less
Organisations and individuals trading in electronic markets are increasingly using automated agents. Agents are particularly useful in markets where trade might not otherwise have been possible, for example because a lot of information must be processed quickly, or because employing human traders in 24-hour, small transaction markets is not cost-effective. Markets for communication bandwidth, where organisations trade the rights to transmit data over a network, are one such application. Because demand fluctuates considerably every few seconds, agent-based spot markets provide extra liquidity. In order for such markets to work effectively, it is necessary to provide users with agents that can represent and maximise the goals of the organisations using them. This is a hard problem. This chapter provides general principles and examples of good algorithms, based on our research in this area and on our work on designing agents and markets for trading communication bandwidth — some of which on behalf of HP labs. The contribution of our approach is threefold: First, the chapter provides a definition for what a ‘good’ trading agent is. Second, the chapter discusses how to design an interface where users can easily and effectively communicate their preferences to the agents. Clearly, if users can not do that, then this will limit both their incentives to use such technologies and the benefits of what they can achieve when they so. Third, the chapter shows how to design adaptive agents based on ideas from statistical decision theory. In particular our agents are designed to differentiate stable from unstable market conditions and to best respond to these changes. The chapter describes simulation results which show that our design performs well in a large number of trading environments which tries to capture what real markets trading is like.
Manuel F. Bagues and Mauro Sylos Labini
- Published in print:
- 2009
- Published Online:
- February 2013
- ISBN:
- 9780226032887
- eISBN:
- 9780226032900
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226032900.003.0005
- Subject:
- Economics and Finance, Econometrics
This chapter evaluates the impact of the availability of electronic labor markets on the university-to-work transition. In particular, the effects of a specific electronic intermediary, the ...
More
This chapter evaluates the impact of the availability of electronic labor markets on the university-to-work transition. In particular, the effects of a specific electronic intermediary, the interuniversity consortium AlmaLaurea, on graduates' unemployment, mobility, and matching quality are studied. In a nutshell, AlmaLaurea collects and organizes online information concerning college graduates' curricula and conditional on their permission, sells it to firms in electronic format. The AlmaLaurea recruitment service turns out to be an insightful example concerning how online communication technologies—coupled with more traditional forms of intermediation—might ameliorate the way in which employers and employees match in the labor market. The single characteristic of AlmaLaurea that possibly made it a successful intermediary is also the most unusual—member universities certify the information contained in electronic curricula and also provide some information on the entire population of graduates.Less
This chapter evaluates the impact of the availability of electronic labor markets on the university-to-work transition. In particular, the effects of a specific electronic intermediary, the interuniversity consortium AlmaLaurea, on graduates' unemployment, mobility, and matching quality are studied. In a nutshell, AlmaLaurea collects and organizes online information concerning college graduates' curricula and conditional on their permission, sells it to firms in electronic format. The AlmaLaurea recruitment service turns out to be an insightful example concerning how online communication technologies—coupled with more traditional forms of intermediation—might ameliorate the way in which employers and employees match in the labor market. The single characteristic of AlmaLaurea that possibly made it a successful intermediary is also the most unusual—member universities certify the information contained in electronic curricula and also provide some information on the entire population of graduates.
Andrew Byde and Nir Vulkan
- Published in print:
- 2013
- Published Online:
- January 2014
- ISBN:
- 9780199570515
- eISBN:
- 9780191765957
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199570515.003.0015
- Subject:
- Economics and Finance, Financial Economics
This chapter describes how markets that use a combination of automated and human agents can work. It presents a system AutONA (Automated One-to-one Negotiation Agent), for conducting multiple ...
More
This chapter describes how markets that use a combination of automated and human agents can work. It presents a system AutONA (Automated One-to-one Negotiation Agent), for conducting multiple simultaneous negotiations over price and quantity. The use of competition between sellers to guide negotiation tactics is key. This system was implemented and human trials were conducted to evaluate it based on its ability to negotiate ‘reasonably’, and on its performance with respect to a trading game that was designed independently of the system itself. AutONA passed a limited version of the Turing test: The experiments did not reveal any obvious exploitation that a human trader can use against AutONA.Less
This chapter describes how markets that use a combination of automated and human agents can work. It presents a system AutONA (Automated One-to-one Negotiation Agent), for conducting multiple simultaneous negotiations over price and quantity. The use of competition between sellers to guide negotiation tactics is key. This system was implemented and human trials were conducted to evaluate it based on its ability to negotiate ‘reasonably’, and on its performance with respect to a trading game that was designed independently of the system itself. AutONA passed a limited version of the Turing test: The experiments did not reveal any obvious exploitation that a human trader can use against AutONA.
