How algorithms interact: Goffman's 'interaction order' in automated trading

Research output: Contribution to specialist publicationArticle

Abstract

In a talk in 2013, Karin Knorr Cetina referred to ‘the interaction order of algorithms’, a phrase that implicitly invokes Erving Goffman's ‘interaction order’. This paper explores the application of the latter notion to the interaction of automated-trading algorithms, viewing algorithms as material entities (programs running on physical machines) and conceiving of the interaction order of algorithms as the ensemble of their effects on each other. The paper identifies the main way in which trading algorithms interact (via electronic ‘order books’, which algorithms both ‘observe’ and populate) and focuses on two particularly Goffmanesque aspects of algorithmic interaction: queuing and ‘spoofing’, or deliberate deception. Following Goffman's injunction not to ignore the influence on interaction of matters external to it, the paper examines some prominent such matters. Empirically, the paper draws on documentary analysis and 338 interviews conducted by the author with high-frequency traders and others involved in automated trading.
Original languageEnglish
Pages39-59
Number of pages21
Volume36
No.2
Specialist publicationTheory, Culture & Society
DOIs
Publication statusPublished - 9 Mar 2019

Keywords

  • algorithm
  • Karin Knorr Cetina
  • Erving Goffman
  • high-frequency trading
  • interaction order
  • queuing
  • spoofing

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