Alex Preda

Socio-Technical Agency in Financial Markets The Case of the Stock Ticker

Recent discussions of calculative agency in financial markets (a variety of socio-technical agency) have stressed that technology constitutes markets through standardization. This raises the question of additional agential features of financial technologies, which may go beyond, supplement and embed standardization and calculability. I propose here the concept of ‘generator’ as a way of capturing such features of socio-technical agency in financial markets. I use this concept for examining the stock ticker, the first custom-tailored technology adopted by financial markets. I show that the ticker generated temporal structures and modes of visualizing these structures, together with representational languages, interpretive tools and boundaries associated with access to financial data.

Frontiers of capital: Ethnographic reflections on the new economy

With the NASDAQ having lost 70 percent of its value, the giddy, optimistic belief in perpetual growth that accompanied the economic boom of the 1990s had fizzled by 2002. Yet the advances in information and communication technology, management and production techniques, and global integration that spurred the “New Economy” of the 1990s had triggered profound and lasting changes. Frontiers of Capital brings together ethnographies exploring how cultural practices and social relations have been altered by the radical economic and technological innovations of the New Economy. The contributors, most of whom are anthropologists, investigate changes in the practices and interactions of futures traders, Chinese entrepreneurs, residents of French housing projects, women working on Wall Street, cable television programmers, and others. Some contributors highlight how expedited flows of information allow business professionals to develop new knowledge practices. They analyze dynamics ranging from the decision-making processes of the Federal Reserve Board to the legal maneuvering necessary to buttress a nascent Japanese market in over-the-counter derivatives. Others focus on the social consequences of globalization and new modes of communication, evaluating the introduction of new information technologies into African communities and the collaborative practices of open-source computer programmers. Together the essays suggest that social relations, rather than becoming less relevant in the high-tech age, have become more important than ever. This finding dovetails with the thinking of many corporations, which increasingly employ anthropologists to study and explain the “local” cultural practices of their own workers and consumers. Frontiers of Capital signals the wide-ranging role of anthropology in explaining the social and cultural contours of the New Economy. Contributors. Jean Comaroff, John L. Comaroff, Greg Downey, Melissa S. Fisher, Douglas R. Holmes, George E. Marcus, Siobhan O’Mahony, Aihwa Ong, Annelise Riles, Saskia Sassen, Paul A. Silverstein, AbdouMaliq Simone, Neil Smith, Caitlin Zaloom

The sociological approach to financial markets

As a part of the renaissance and growth of economic sociology during the past two decades, and in response to processes such as economic globalization, financial markets have been increasingly scrutinized by sociologists. Their investigation is seen as relevant with respect to understanding the structure and dynamics of advanced societies, the dynamics of social development, as well as fundamental aspects of human behaviour. This paper charts recent developments in the sociology of financial markets; its starting point is the treatment of the concept of information within three sociological orientations: the social-structural approach, sociological neo-institutionalism and the newer social studies of finance. By highlighting their different assumptions about information and market behaviour, I discuss how these approaches conceptualize financial markets, the methodological implications and the ways in which they contribute to the study of financial exchanges. Copyright 2007 The Author Journal compilation

THE RISE OF THE POPULAR INVESTOR: Financial Knowledge and Investing in England and France, 1840–1880

This article examines the knowledge frame in which financial investing became a popular, socially legitimate, and desirable activity in England and France in the nineteenth century. The empirical basis underlying the arguments of the article is provided by investor manuals, newspaper reports, advice brochures, stock price lists, financial charts, and novels from the period. The analysis focuses on the instruments and processes making possible a financial knowledge that could be legitimately acquired and utilized by separate, unrelated, individual actors dispersed over the territory. The core argument is that this knowledge should be understood as an integrative social practice—that is, as a nexus of legitimating discourses, rules, skills, and cognitive instruments that transformed financial investing into a socially desirable activity. At the same time, they generated forms of financial knowledge that were no longer embedded in local conditions, but could be transported across various contexts. The dominant modes of evaluating financial securities include the new instruments of balance sheet analysis, problem solving, and charts. In this integrative nexus of discourses and cognitive instruments, financial activities became first and foremost an object of knowledge. The investors social and personal responsibilities became dependent upon his financial knowledge. This stance, together with the social desirability of financial investing and with the cognitive instruments provided to individual, dispersed actors, constitutes the ground for the expansion of financial investing.

The Oxford Handbook of The Sociology of Finance

Recent years have seen a surge of interest in the workings of financial institutions and financial markets beyond the discipline of economics, which has been accelerated by the financial crisis of the early twenty-first century. The Oxford Handbook of the Sociology of Finance brings together twenty-nine chapters, written by scholars of international repute from Europe, North America, and Asia, to provide comprehensive coverage on a variety of topics related to the role of finance in a globalized world, and its historical development. Topics include global institutions of modern finance, types of actors involved in financial transactions and supporting technologies, mortgage markets, rating agencies, and the role of financial economics. Particular attention is given to financial crises, which are discussed in a special section, as well as to alternative forms of finance, including Islamic finance and the rise of China. The Handbook will be an indispensable tool for academics, researchers, and students of contemporary finance and economic sociology, and will serve as a reference point for the expanding international community of scholars researching these areas from a broadly-defined sociological perspective. Contributors to this volume - Mitchel Abolafia, SUNY/ Albany Daniel Beunza, LSE Bruce Carruthers, Northwestern University Erica Coslor, University of Chicago Gerald Davis, University of Michigan Frank Dobbin, Harvard University Neil Fligstein, University of California, Berkeley Shaun French, University of Nottingham Bai Gao, Duke University Adam Goldstein, University of California, Berkeley Iain Hardie, University of Edinburgh Brooke Harrington, Max Planck Institute Cologne Mark Jacobs, George Mason University Franck Jovanovic, Universite de Quebec a Montreal Jiwook Jung, Harvard University Karin Knorr Cetina, University of Chicago Bruce Kogut, Columbia University Andrew Leyshon, University of Nottingham Donald MacKenzie, University of Edinburgh Josephine Maltby, York University Bill Maurer, UC Irvine Juan Pablo Pardo-Guerra, University of Edinburgh Aaron Z. Pitluck, Illinois State University Martha Poon, UCSD Michael Power, LSE Alex Preda, University of Edinburgh Janette Rutterford, Open University Saskia Sassen, Columbia University Lucia Siu, Lingnan University Hong Kong Charles Smith, CUNY David Stark, Columbia University Richard Swedberg, Cornell University Olav Velthuis, University of Amsterdam Leon Wansleben, University of Konstanz Caitlin Zaloom, New York University Ezra Zuckerman, MIT

Informative Prices, Rational Investors: The Emergence of the Random Walk Hypothesis and the Nineteenth-Century "Science of Financial Investments"

In a series of articles marking the recent anniversary of Louis Bachelier’s “Théorie de la spéculation,” historians have reevaluated Bachelier’s role as a forerunner of modern financial theory and reconsidered the historical origins of the latter. They have emphasized anew the importance of Bachelier in the development of modern financial theory (see Sullivan and Weithers 1994, 31; 1991, 165; Harrison 1997, 175; Courtault et al. 2000) and, in the process, have reconsidered the timing of two achievements normally credited to him: the options pricing theory and the random walk hypothesis. Historians now believe that that theory and hypothesis were developed in the 1860s and 1870s, well before the publication of Bachelier’s “Theory of Speculation” in 1900, and perhaps not by Bachelier at all (Jovanovic 2000, 2001; Jovanovic and Le Gall 2001). For example, Franck Jovanovic and Philippe Le Gall have recently argued that the key elements of the random walk hypothesis were first formulated in a book by Jules Regnault, called Calcul des chances et philosophie de la Bourse [Chance calculus and the philosophy of the

Order with things? Humans, artifacts, and the sociological problem of rule-following

This paper examines the thesis formulated by the Actor-Network Theory (ANT), namely that understanding social order and action needs treating artifacts as its active co-constituents. This contention has at its core the principle of generalized symmetry formulated by Bruno Latour. The grounds of the argument are to be found in the concepts of rule and of rule-following action. Starting from them, the paper examines the ANT solution to how social rules are followed and reproduced, and compares it with the solutions offered by ethnomethodology and by Bourdieus practice theory. Two key methodological aspects guide the analysis: how these constituents are conceived and which concepts are needed to describe them. Against this background, a distinction is made between methodological and ontological symmetry. The paper argues that the notions of social rules and of rule-following social action can be understood only on the premises of ontological asymmetry. In the conclusion, the paper argues against Bruno Latours principle of generalized symmetry, that (1) applying a principle of methodological symmetry leads to (2) conceiving the asymmetry between human actors and artifacts as a necessary condition for the reproduction of social order.

Financial Knowledge, Documents, and the Structures of Financial Activities

Starting from participant observation and interviews conducted in several European banks, the article examines how financial knowledge is constituted in the process of producing documents like research reports, analyses, and newsletters. The core argument is that documents act as organizational devices, with the help of which relationships are created, maintained, and managed across various contexts. In this perspective, the production of financial reports, analyses, and newsletters creates (1) knowledge-based networks of social relationships in which financial action is embedded and (2) stable temporal structures, thus ensuring the continuity of financial activities. On these grounds, the author argues here that knowledge-generating processes should be taken into account as an essential dimension of the structural embeddedness of financial action.

The Sciences of Finance, Their Boundaries, Their Values

Several approaches from the social and natural sciences take finance, and especially financial markets, as a domain of systematic inquiry. Historians of economic thought have discussed extensively the emergence and evolution of some major, competing paradigms within finance, focusing on differences in their methodological and theoretical assumptions, as well as on the ways in which they have achieved dominant positions in the academia. However, how do these paradigms see the problem of their own value, in relationship to the value of their field of study? In other words, how do they present finance as a set of phenomena worth studying, and what is valuable about studying them from a particular angle? I examine here in this respect five significant scientific approaches to finance: financial economics, market microstructure, behavioral finance, social studies of science, and econophysics. I show how they represent the study of financial markets as a valuable, systematic endeavor, and how they represent their own value in providing a distinctive approach to the study of finance. I distinguish between internalistic and externalistic claims to value among these approaches. Internalistic value claims make reference to data accuracy and to methodological adequacy, while externalistic claims make reference to investigating links between finance and other forms of social organization and institutions.

Does a scopic regime produce conformism? Herding behavior among trade leaders on social trading platforms

ABSTRACT Social trading platforms (STPs) are transparent online markets governed by a scopic regime, where order flow is publicly disclosed and participants are subject to constant reciprocal scrutiny. Participants on STPs can be categorized into trade leaders and copiers, where the former execute unique trades and manage the funds allocated to them by the latter in return for compensation. Given limited individual capacity and the competition to attract copiers, we investigate whether the scopic regime produces excess and perpetual conformism among trade leaders. Using data from a popular STP, and from an anonymous traditional foreign exchange broker, we show that the scopic regime produces excess levels of herding. Under the scopic environment, we find that herding is high when market information is scarce, which is evidence of herding due to informational cascades. We find herding to be relatively low among risk-seeking trade leaders, which may be a sign of overconfidence. Herding is high for larger trades, suggesting that traders herd to avoid the disappointment associated with underperforming on large positions. Finally, we show that herding in the scopic environment persists at much higher levels compared to traditional environments. Our findings indicate that exposure to a scopic information-rich environment augments the limitations and personal biases of individual traders, thus producing excess and perpetual herding.