Physics – Physics and Society
Scientific paper
2011-10-03
PNAS 108: 5296-5301 (2011)
Physics
Physics and Society
Scientific paper
10.1073/pnas.1018462108
Successful animal systems often manage risk through synchronous behavior that spontaneously arises without leadership. In critical human systems facing risk, such as financial markets or military operations, our understanding of the benefits associated to synchronicity is nascent but promising. Building on previous work illuminating commonalities between ecological and human systems, we compare the activity patterns of individual financial traders with the simultaneous activity of other traders---an individual and spontaneous characteristic we call synchronous trading. Additionally, we examine the association of synchronous trading with individual performance and communication patterns. Analyzing empirical data on day traders' second-to-second trading and instant messaging, we find that the higher the traders' synchronous trading, the less likely they lose money at the end of the day. We also find that the daily instant messaging patterns of traders are closely associated with their level of synchronous trading. This suggests that synchronicity and vanguard technology may help cope with risky decisions in complex systems and furnish new prospects for achieving collective and individual goals.
Hagerty Kathleen
Saavedra Serguei
Uzzi Brian
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