Text IV

1A central conjecture of the social studies of finance is
that equipment matters: it changes the nature of the economic
agent, of economic action, and of markets.
4Consider, for example, physical equipment such as
the stock ticker or trading screens connected in electronic
networks, which circumvent the most basic of all bodily
7limitations — the inability to be in two places at once. They
made fine-grained knowledge of price movements available in
close to real time to geographically dispersed market
10participants. Alex Preda conjectures, for instance, that the
ticker helped prompt the rise of “chartism” or “technical
analysis”: the belief — still widespread — that patterns can be
13found in price graphs that have predictive value. Actors’
equipment goes beyond physical technologies: their
“conceptual equipment” also matters, or so the social studies
16of finance posit. Financial markets are complicated places.
Given the limited memory and computational capacity of the
human brain, economic agents must develop and acquire
19systematic ways of making sense of markets. Organizations
must develop procedures for interacting with markets, and
to an increasing extent those procedures are implemented
22in algorithms in automated pricing, trading and
risk-management systems.
Sometimes, the ways of thinking, procedures, and
25algorithms that are employed derive from financial economics.
Probably more often, however, practitioners’ ways of thinking
and associated ways of acting have no direct connection to
28“academic” economics or indeed are regarded by economists
as mistaken. Chartism is an example of the latter: financial
economists regard it as on a par with astrology, but many
31traders take it seriously, and act on the basis of it.
“Public facts”, such as the LIBOR1, technical
equipment, graphical presentations, and “conceptual
34equipment” are all aspects of the diverse cognitive and
calculative processes that take place in financial markets.
These processes are “distributed” in the sense that a given task
37is often performed not by a single unaided human but by
multiple human beings, objects, and technical systems. To
understand cognition that involves multiple collaborating
40human beings and/or interaction with objects and technical
systems, one must go beyond the psychological or cognitive
science analysis of the individual “bounded by the skin”.
43As Hutchins puts it, “a group performing [a] cognitive
task may have cognitive properties that differ from the
cognitive properties of any individual”.

1 LIBOR stands for London interbank offered rate. The interest rate at which banks offer to lend funds (wholesale money) to one another in the international interbank market (source: Financial Times). Donald MacKenzie. Material Markets. New York: Oxford University Press, 2009, p. 13-6 (adapted).