PSI-Q Conference: does the sociology of finance have alpha?
February 22, 2010
Hedge funds. Sociologists. Two days in London. An intriguing event is going to take place this coming June: The Dealers’ Group, a for-profit conference organization company, is putting together a conference that showcases the social studies of finance to City practitioners. The conference will include notable speakers such as Donald MacKenzie and Emanuel Derman.
There’s something special about academic – practitioner conferences. Ultimately, all of them seek the chemical reaction that takes place when supply and demand of ideas are put together. But this particular conference could turn out to be more intriguing than that. For the first time, the ideas being offered are those of the social studies of finance. See, for example, the text from the conference (the italics are my own):
Psi-Q is a ground-breaking two-day event bringing together the top brains in finance, academia and regulation to discuss research into the philosophy, sociology and psychology of financial decision making (…)
Conference topics include how cultures in credit markets influence understanding and behaviour, how philosophy informs financial mathematics and the impact of friends and networks on trading decisions.
The conference will ask whether there is anything we can learn from applying a social sciences overlay to complex markets, and discuss what is “actionable” in terms of quantifying these themes in trading strategies, risk management and regulation
Consider the stakes. None of the core concepts of the social studies of finance –performativity, materiality, financial modeling, socio-technical networks– have been put to work on the financial markets. They are “practitioner virgin.” And as we know, what matters in finance is the novelty of the idea. A concept might be accurate, but it will yield no alpha –i.e., no above-normal returns– if it’s already incorporated in stock prices. This makes this new workshop special.
David Wiggan, the entrepreneurial mind behind the PSI-Q project, has had the vision and perseverance to not repeat the tried-and-true formula of serving behavioral bigmacs to the hedge funds. Cannot wait for June 15th.