Social Media, Financial Algorithms and the Hack Crash

Forthcoming in Theory Culture & Society (Published online before print May 4, 2015)

20 Pages Posted: 7 May 2015  

Tero Karppi

SUNY Buffalo

Kate Crawford

Microsoft Research; MIT Center for Civic Media; NYU Information Law Institute

Date Written: April 10, 2015

Abstract

'@AP: Breaking: Two Explosions in the White House and Barack Obama is injured’. So read a tweet sent from a hacked Associated Press Twitter account @AP, which affected financial markets, wiping out $136.5 billion of the Standard & Poor’s 500 Index’s value. While the speed of the Associated Press hack crash event and the proprietary nature of the algorithms involved make it difficult to make causal claims about the relationship between social media and trading algorithms, we argue that it helps us to critically examine the volatile connections between social media, financial markets, and third parties offering human and algorithmic analysis. By analyzing the commentaries of this event, we highlight two particular currents: one formed by computational processes that mine and analyze Twitter data, and the other being financial algorithms that make automated trades and steer the stock market. We build on sociology of finance together with media theory and focus on the work of Christian Marazzi, Gabriel Tarde and Tony Sampson to analyze the relationship between social media and financial markets. We argue that Twitter and social media are becoming more powerful forces, not just because they connect people or generate new modes of participation, but because they are connecting human communicative spaces to automated computational spaces in ways that are affectively contagious and highly volatile.

Keywords: affect, data, digital, financial markets, Christian Marazzi, new media, Gabriel Tarde, technological culture, time

Suggested Citation

Karppi, Tero and Crawford, Kate, Social Media, Financial Algorithms and the Hack Crash (April 10, 2015). Forthcoming in Theory Culture & Society (Published online before print May 4, 2015). Available at SSRN: https://ssrn.com/abstract=2602857

Tero Karppi (Contact Author)

SUNY Buffalo ( email )

12 Capen Hall
Buffalo, NY 14260
United States

Kate Crawford

Microsoft Research ( email )

641 Avenue of the Americas
641 Avenue of the Americas, level 7
New York, NY NY 10011
United States

MIT Center for Civic Media ( email )

75 Amherst St
Cambridge, MA 02139
United States

NYU Information Law Institute ( email )

Wilf Hall
139 MacDougal Street
New York, NY NY 10012
United States

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