Research and analysis

Computer trading: 'robot phase transition' in experimental human algorithmic markets

Report studying the dynamics of mixed human-algorithmic markets.

• From: Government Office for Science
• Published: 23 October 2012

Documents

Exploring the 'robot phase transition' in experimental human algorithmic markets (DR25)

Ref: BIS/12/1058

PDF, 3.66 MB, 51 pages

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Details

Normally humans and algorithmic systems can trade with one another, but above a certain speed there is a sudden change to a market in which humans cannot take part and where all transactions are robot-to-robot. This abrupt transition from a mixed human-robot phase to an all-robot phase is known as the ‘robot phase transition’.

This report presents the findings of laboratory-style experiments where human traders interacted with algorithmic trading agents (ie robots) in experimental models of electronic financial markets.

This review was commissioned as part of the Foresight project on the future of computer trading.

Published 23 October 2012