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Risk Taking and Action in Online Anonymous Markets

Dr Alex Preda
University of Edinburgh

Date: 11 November 2008
Time: 1-2:30pm
Venue: CARR Seminar Room, H615

Recent technological developments have led to the gradual replacement of trading floor transactions with anonymous, online dealing in financial securities. These developments have also brought real-time financial transactions within the reach of non-professional traders. It seems that technological advances are bringing financial markets closer to the normative model (as formulated by economics) of individual, dispersed agents acting on the basis of the same information (as provided by computer screens). A central question, therefore, is whether online anonymous trading transforms the behaviour of market actors, making them more like calculative agents, who project and evaluate courses of action, develop plans and strategies, taking calculated risks. Such a question is also relevant because more and more non-institutional traders take advantage of electronic trading opportunities, investing their savings in playing the market. Does online trading transform market players into rational, calculative agents? How do traders perceive, project, and evaluate risks in electronic trading environments? What are the implications for the increased public engagement with financial trading? These questions are examined based on ethnographic observations of concrete trading behaviours in online anonymous markets. The data discussed here is part of an ongoing, ESRC-financed project on the links between action and cognition in online markets.

About the speaker
Alex Preda works in Sociology, part of the School of Social and Political Studies, University of Edinburgh. In addition to a book about the emergence of medical knowledge on AIDS, he has authored a number of articles on financial markets technology and behaviour. He is also the author of Framing Finance: The Boundaries of Markets and Modern Capitalism (University of Chicago Press, forthcoming Spring 2009) and the co-editor of The Sociology of Financial Markets (Oxford University Press, 2005). He is currently working on a book on Markets: Economic Life and Social Behaviour, contracted with Oxford University Press. His current research interest focuses on information, cognition and trading behaviour in online anonymous markets. He is conducting an ERSC-funded research project on Technology, Action and Cognition in Online Anonymous Markets: A Sociological Study of Non-institutional Traders.