Some excerpts from an ethnographic study of the operations of a Wall Street financial trading firm, bearing on distributed cognition and joint-action planning:
This emphasis on cooperative interaction underscores that the cognitive tasks of the arbitrage trader are not those of some isolated contemplative, pondering mathematical equations and connected only to to a screen-world. Cognition at International Securities is a distributed cognition. The formulas of new trading patterns are formulated in association with other traders. Truly innovative ideas, as one senior trader observed, are slowly developed through successions of discreet one-to-one conversations.
. . .
An idea is given form by trying it out, testing it on others, talking about it with the “math guys,” who, significantly, are not kept apart (as in some other trading rooms), and discussing its technical intricacies with the programmers (also immediately present).” (p. 265)
The trading room thus shows a particular instance of Castell’s paradox: As more information flows through networked connectivity, the more important become the kinds of interactions grounded in a physical locale. New information technologies, Castells (2000) argues, create the possibility for social interaction without physical contiguity. The downside is that such interactions can become repititive and programmed in advance. Given this change, Castells argues that as distanced, purposeful, machine-like interactions multiply, the value of less-directd, spontaneous, and unexpected interactions that take place in physical contiguity will become greater (see also Thrift 1994; Brown and Duguid 2000; Grabhar 2002). Thus, for example, as surgical techniques develop together with telecommunications technology, the surgeons who are intervening remotely on patients in distant locations are disproportionately clustering in two or three neighbourhoods of Manhattan where they can socialize with each other and learn about new techniques, etc.” (p. 266)
“One examplary passage from our field notes finds a senior trader formulating an arbitrageur’s version of Castell’s paradox:
“It’s hard to say what percentage of time people spend on the phone vs. talking to others in the room. But I can tell you the more electronic the market goes, the more time people spend communicating with others inside the room.” (p. 267)
Of the four statistical arbitrage robots, a senior trader observed:
“We don’t encourage the four traders in statistical arb to talk to each other. They sit apart in the room. The reason is that we have to keep diversity. We could really hammered if the different robots would have the same P&L [profit and loss] patterns and the same risk profiles.” (p. 283)
Daniel Beunza and David Stark : Tools of the trade: the socio-technology of arbitrage in a Wall Street trading room. In: Trevor Pinch and Richard Swedborg (Editors): Living in a Material World: Economic Sociology Meets Science and Technology Studies. Cambridge, MA, USA: MIT Press. Chapter 8, pp. 253-290.
M. Castells : The Information Age: Economy, Society and Culture. Blackwell, Second Edition.