In a previous life, I enjoyed a relationship with leading Polish neurologist Dr Kasia Sieradzan and she ignited my interest in the intellectual combination of neurology and economics.
So, when I was putting together a creative grouping of individuals to trade the markets, some neuro input was a must.
My initial work involved the training up of neural networks (NNs) to serve as part of our portfolio of trading instruments. We now use NNs for 15% of our trading activities alongside our unified trading model (UTM).
Such algorithmic black-box technology is all well and good but I was more interested in the science underpinning behavioural economics.
As we have previously stated, neoclassical economics assumes rationality in our decision making. Behavioural economics is not having any of this and we're with the behaviouralists.
A couple of members of our Trading Team are currently involved in some experiments with researchers at the Massachusetts Institute of Technology to look at brain activity when trading decisions are being made. Utilising function magnetic resonance imaging (fMRI), the early results are very interesting and are of benefit both scientifically and as an input to our holistic view of the trading process.
By targeting particular key decision-making breakpoints, we have been able to show that different parts of the brain are involved at different parts of the decision-making process. We are particularly interested in the grey area covering intuition and analysis.
Previous work by our co-researchers has shown how shareholder capitalism uses old neural circuits evolved for gratification and avoiding danger to engender addictive consumerist behaviour. For example, as the brain analyses the product and the price separately, people are more willing to purchase an item on credit as the pain is deferred.
Effectively experimenting on ourselves is a very positive addition to our trading profile. Edge...
