How to recognize opportunities: Heterarchical search in a Wall Street trading room
AbstractOur task in this paper is to analyze the organization of trading in the era of quantitative finance. To do so, we conduct an ethnography of arbitrage, the trading strategy that best exemplifies finance in the wake of the quantitative revolution. In contrast to value and momentum investing, we argue, arbitrage involves an art of association - the construction of equivalence (comparability) of properties across different assets. In place of essential or relationa l characteristics, the peculiar valuation that takes place in arbitrage is based on an operation that makes something the measure of something else - associating securities to each other. The process of recognizing opportunities and the practices of making novel associations are shaped by the specific socio-spatial and socio-technical configurations of the trading room. Calculation is distributed across persons and instruments as the trading room organizes interaction among diverse principles of valuation.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 735.
Date of creation: Jan 2004
Date of revision: Sep 2005
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Web page: http://www.econ.upf.edu/
Arbitrage; trading; heterarchy;
Find related papers by JEL classification:
- M11 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Production Management
- G19 - Financial Economics - - General Financial Markets - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-05-26 (All new papers)
- NEP-ENV-2004-05-26 (Environmental Economics)
- NEP-FMK-2004-05-26 (Financial Markets)
- NEP-HPE-2004-05-26 (History & Philosophy of Economics)
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