Juan Pablo Pardo-Guerra

Drilling through the Allegheny mountains: liquidity, materiality and high-frequency trading

In 1999, Carruthers and Stinchcombe provided the classic discussion of ‘the social structure of liquidity’: the institutional arrangements that support markets in which ‘exchange occurs easily and frequently’. Our argument in this paper is that the material aspects of these arrangements – and particularly the materiality of prices – need far closer attention than they normally receive. We develop this argument by highlighting two features of new assemblages that have been created in financial markets since 1999. First, these assemblages give sharp economic significance to spatial location and to physical phenomena such as the speed of light (the physics of these assemblages is Einsteinian, not Newtonian, so to speak). Second, they have provoked fierce controversy focusing on ultra-fast ‘high-frequency trading’, controversy in which issues of materiality are interwoven intimately with questions of legitimacy, particularly of fairness.

Creating flows of interpersonal bits: the automation of the London Stock Exchange, c. 1955–90

Abstract This article deals with the concept of market information. In particular, it argues that references to the so-called conduit metaphor, which represents markets as a series of information flows, hide the localized, historically contingent and materially mediated practices of the economy. Following the tradition of the performative theory of social institutions, this article argues that the specific meaning of ‘market information’ and its concrete manifestations (e.g. prices) depend on the sociotechnical character of the calculative practices through which market participants orient their economic actions. The point is illustrated through a historical reconstruction of the introduction of price and quote dissemination technologies in the London Stock Exchange between 1955 and 1990. By highlighting the historical and technological contingency of prices, the case of the London Stock Exchange shows that it is impossible to provide a universally and temporally invariant definition of market information.

Insurgent capitalism: Island, bricolage and the re-making of finance

Abstract Drawing on recent discussions of the material cultures of markets and of financial innovation as bricolage, this paper explores the development of Island, a new share-trading venue set up in 1995. We examine Islands roots in a very specific conflict in the US financial markets and in the information libertarianism of ‘hacker culture’, and examine the material bricolage involved in Islands construction. The paper also outlines the processes that led to a dramatic ‘Latourian’ change of scale: Island was originally a ‘micro’ development on the fringes of US markets, but within little more than a decade key features of Island became close to compulsory, as the nature of North American and Western European share trading changed utterly.

How much for the Michelangelo? Valuation, Commoditization and Finitism in the Secondary Art Market

This article is a sociological re-evaluation of the auction house, a central institution of the secondary art market. As an intermediary between buyers and sellers, the auction house is portrayed as an institution that straddles the poles of economic (calculative) and social (aesthetic) life. Relying on the work of Michel Callon and Barry Barnes, the process of the commoditization that takes place within auction houses is presented as a structuring mechanism through which symbolic, economic and cultural values are shaped and reinforced. In particular, the finitist calculative practices associated with commoditization (through the generation of estimated auction prices) are presented as responsible for reproducing the secondary art market and the aesthetic judgements on which it is based.

A Study of Neo-Austrian Economics Using an Artificial Stock Market

An agent-based artificial financial market (AFM) is used to study market efficiency and learning in the context of the Neo-Austrian economic paradigm. Efficiency is defined in terms of the excess profits associated with different trading strategies, where excess for an active trading strategy is defined relative to a dynamic buy and hold benchmark. We define an Inefficiency matrix that takes into account the difference in excess profits of one trading strategy versus another (signal) relative to the standard error of those profits (noise) and use this statistical measure to gauge the degree of market efficiency. A one-parameter family of trading strategies is considered, the value of the parameter measuring the relative informational advantage of one strategy versus another. Efficiency is then investigated in terms of the composition of the market defined in terms of the relative proportions of traders using a particular strategy and the parameter values associated with the strategies. We show that markets are more efficient when informational advantages are small (small signal) and when there are many coexisting signals. Learning is introduced by considering copycat traders that learn the relative values of the different strategies in the market and copy the most successful one. We show how such learning leads to a more informationally efficient market but can also lead to a less efficient market as measured in terms of excess profits. It is also shown how the presence of exogeneous information shocks that change trader expectations increases efficiency and complicates the inference problem of copycats.

A New Measure of Market Inefficiency

An oft stated corrollary, sometimes taken as its definition, of the Efficient Markets Hypothesis is that in an efficient market it should not be possible to systematically make excess or abnormal returns. This begs the question of excess or abnormal relative to what? Traditional benchmarks either fail to distinguish between trading returns and market returns, or are dependent on an associated asset pricing model, thus leading to the joint-hypothesis problem. In this paper we discuss a purely empirical measure - Excess Trading Returns - derived from the difference in profits associated with an agent portfolio where one or more trades were executed relative to a Buy-and-Hold portfolio where they were not, the Buy-and-Hold benchmark being dynamic and/or unique to the agent. With this measure in hand we introduce the relative inefficiency associated with a pair of agents, agent groups or trading strategies and from this define an Inefficiency Matrix that can provide a complete empirical characterization of the inefficiencies inherent in an entire market.

Priceless calculations: reappraising the sociotechnical appendages of art

ABSTRACT In this article, I forward an analysis of the art market that seeks to emphasize the often unexamined yet central economizing practices that fuel the circulation of objects and thus contribute to the distinct patterns of consumption, ownership, and mobilization of the art world. In stressing these economizing practices, I attempt to make visible the underlying sociality and symbolic practices that provide aesthetic and cultural meaning to artistic objects and institutions. The analysis presented here derives from the so-called performativity program and that has been extended in recent years throughout economic sociology. Specifically, this article draws on the performativity program to highlight the mechanisms through which artistic objects are taken-into-account prior to their circulation in the market. As is argued, such forms of actuarial practice are not restricted to orienting action within networks of market exchange; rather, they are partly constitutive of the aesthetic and cultural values attached to art in contemporary capitalism.

Orderly Fashion: A Sociology of Markets:

The Professional Guinea Pig belongs to a social science growth area investigating the pharmaceutical industry in contemporary health care. This literature is united by a prevailing consensus that views the drug industry as the villain du jour in health policy. After focusing on unbridled professional power and the for-profit insurance industry, the critical social gaze is turned to Big Pharma. Consequently, most social scientists see it as their job to expose the scientific manipulation, the chase of profit margins, the dehumanization, the ethical transgressions, and the inequities that flow from drug industry involvement. In engaging prose, Roberto Abadie delivers the expected social science message. Abadie conducted an eighteen-month ethnography of a group of healthy people who made a living as research subjects in Phase One clinical trials in Philadelphia. Most trial participants are African-American and Latino, but Abadie spent time with a group of young, non-Hispanic white anarchists who enrolled in clinical trials. He compares these trial participants with people enrolling in HIV trials. The book examines the motivations, reflections, and practices of professionalized clinical trial participation. What does Abadie make from this data? He highlights the ‘‘commodification’’ (p. 15) of the trial subjects’ bodies in a ‘‘slow torture economy’’ (p. 46). He pays attention to the ‘‘revolt’’ (p. 54) of the professional research subjects when they felt underpaid and threatened to walk out. Instead they received an

Nanotechnology and the International Regime on Chemical and Biological Weapons

800 bonus. He notes the ‘‘resistance of the weak’’ (p. 60), when ‘‘guinea pigs’’ (p. 21) smuggle in forbidden foods or engage in other acts of ‘‘sabotage’’ (p. 61). Abadie also examines the risk-management strategies of the trial subjects: they weigh money against potential long-term effects but tend to believe that drugs wash out of their bodies in a couple of days. He then compares the professional trial participants to those involved in HIV trials and argues that the latter are motivated by deeper existential concerns but, of course, they also have a disease and participate in different kinds of trials. In a final empirical chapter, Abadie examines the professional trial subject’s limited understanding of informed consent procedures, and argues that the drug industry deliberately uses the consent form to obfuscate the commodified relationship with research subjects. Abadie’s book has two glaring weaknesses. First, he brings much rhetorical bluster to his study but the interview quotes and observations do not bear out the core themes of ‘‘alienation’’ (p. 6) and ‘‘exploitation’’ (p. 154). The fascinating empirical puzzle of his study is that anarchists are willing to swallow their principles and vegan diet to take money from this most controversial industry. In the conclusion, Abadie pays attention to the paradox between anarchist politics and pragmatics, but throughout most of the book he tries to rationalize the anarchists’ justifications for the blood money that sustains their lifestyle of leisure. Some of his friends even minimize the trial risk because they assume that strong government oversight protects them from harm! Abadie writes: ‘‘[these] views of governmental regulation are not totally at odds with their radical [anarchist] beliefs’’ (p. 143). Really? Rather than reconcile the dissonance between what anarchists do and belief in theoretical constructs of exploitation, the explanation seems more mundane. People end up in trial after trial by choice or circumstances because it is easy money. Compared to flipping burgers, cleaning toilets, or being homeless, testing pills is extremely attractive. The job stinks, but the money is good. Abadie also wrote the wrong book. While he lived in the anarchist community, he never participated along with his research subjects in the trials. Abadie’s information comes largely from casual conversations