Evidencing the "robot phase transition" in experimental human-algorithmic markets

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Johnson, Zhao, Hunsader, Meng, Ravindar, Carran, and Tivnan (2012) recently suggested the existence of a phase transition in the dynamics of financial markets in which there is free interaction between human traders and algorithmic trading systems ("robots"). Above a particular time-threshold, humans and robots trade with one another; below the threshold all transactions are robot-to-robot. We refer to this abrupt system transition as the "robot phase transition". Here, we conduct controlled experiments where human traders interact with 'robot' trading agents in minimal models of electronic financial markets to see if correlates of the two regimes suggested by Johnson et al. (2012) occur in such laboratory conditions. Our results indicate that when trading robots act on a super-human timescale, the market starts to fragment, with statistically lower human-robot interactions than we would expect from a fully mixed market. We tentatively conclude that this is the first empirical evidence for the robot phase transition occurring under controlled experimental conditions.
Original languageEnglish
Title of host publicationICAART-2013
Subtitle of host publicationProceedings of the Fifth International Conference on Agents and Artificial Intelligence, Vol. 1 (Agents)
EditorsJoaquim Filipe, Ana L. N. Fred
Place of PublicationBarcelona, Spain
Number of pages8
ISBN (Electronic)9789898565389
Publication statusPublished - Feb 2013
EventICAART-2013: 5th International Conference on Agents and Artificial Intelligence - Barcelona, Spain
Duration: 15 Feb 201318 Feb 2013


ConferenceICAART-2013: 5th International Conference on Agents and Artificial Intelligence


  • automated trading
  • high frequency trading
  • behavioural economics
  • financial markets
  • financial trading


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