The distribution of ignorance on financial markets

Abstract

In the economists' old conception of a market, perfection would arrive when all participants had complete knowledge. However, economists and psychologists have lately realized that ignorance and bias more accurately describe the state of human knowledge even around those hallowed moments of transactional decision making. In these new academic stories, these models of irrationality and bias often take the form of basic cognitive features or evolutionary mal-adaptations. However, it's just, as is often the case, that there is also a historically specific story about local culture to be told about ignorance. This paper will report back from fieldwork conducted with contemporary, computerized stock traders, develop a typology of the things they say they don't know, and then suggest what this has to do with some of the more durable features and behaviours of contemporary financial markets.

“I don’t think anybody really knows”: Constructing reflexive ignorance in climate change adaptation

“…Ignorance, then, is not just a “lack of knowledge,” but “has a substance of its own, as the product of specific practices” (Mair et al., 2012, p. 3). In this sense, ignorance is relational—a dialectical process which can be studied through “the accumulated ways a group of people make sense of the world” (Souleles, 2019, p. 516). For instance, in relation to the 2003 invasion of Iraq, Ungar (2008) speaks of a “chain of ignorance” whereby multiple individuals and institutions, usually responsible for overseeing democratic processes, failed to do so.…”

“…That is, rather than seeing knowledge as a process of pitting “facts” against each other, we need to understand “the cultural reproduction and transmission of ignorance” (McGoey, 2012a, p. 4) in order to see the ways in which ignorance is productive. In this regard, recent work in the sociology of ignorance has shown that it “is every bit as socially determined and mappable as knowledge” (Souleles, 2019, p. 517).…”

How to think about people who don’t want to be studied: Further reflections on studying up

“…In total I interviewed 69 investment professionals (of our project’s corpus of 182 interviews), and conducted a month of observational field work with a group of options market makers, all across a number of trips and miscellaneous office and conference visits to Chicago, New York, Los Angeles, Washington DC and San Francisco. My fieldwork, in turn, has generated scholarship on the distribution of ignorance on financial markets (Souleles, 2019a), the shifting demographics and semiotic ideologies of traders (Souleles, 2020a), and the way present-day financial markets shape the distribution of wealth in American society (Souleles, n.d.).…”

Urban development project goals and the role of professional ignorance: ambiguous policy objectives and their consequences

“…In the management studies literature, there is a renewed recognition of ignorance as a form of trained skill (Schaefer, 2019; Souleles, 2019). Jeon (2020, p. 842) refers to the “social production of ignorance,” which is “orchestrated by the power inequalities at the structural level.” For instance, the concept of strategic ignorance denotes how, e.g.…”

“…Importantly, in this context, “being ignorant” does not denote a situation wherein the agent has incomplete knowledge or lack knowledge altogether, but rather ignorance denotes “deliberate inattention” (Schaefer, 2019, p. 1,389). For instance, when intendedly being inattentive to details, an agent can protect him or herself against accusations of culpability ex post facto, Souleles (2019) argues, which indicates that professional ignorance is a learned skill in its own right. This skill is of particular value in situation wherein agents operates in a milieu characterized by overwhelming complexity (as in the case of finance trade; Souleles, 2019), or wherein either objectives or the means to achieve declared objectives are obscure or concealed to the actor.…”