Structural balance emerges and explains performance in risky decision-making

Omid Askarisichani,Jacqueline Ng Lane,Ambuj K. Singh,Francesco Bullo,Noah E. Friedkin,Brian Uzzi

doi:10.1038/s41467-019-10548-8

Omid Askarisichani, Jacqueline Ng Lane + Show 4 more

Open Access

https://doi.org/10.1038/s41467-019-10548-8

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Abstract

Polarization affects many forms of social organization. A key issue focuses on which affective relationships are prone to change and how their change relates to performance. In this study, we analyze a financial institutional over a two-year period that employed 66 day traders, focusing on links between changes in affective relations and trading performance. Traders’ affective relations were inferred from their IMs (>2 million messages) and trading performance was measured from profit and loss statements (>1 million trades). Here, we find that triads of relationships, the building blocks of larger social structures, have a propensity towards affective balance, but one unbalanced configuration resists change. Further, balance is positively related to performance. Traders with balanced networks have the “hot hand”, showing streaks of high performance. Research implications focus on how changes in polarization relate to performance and polarized states can depolarize.

Highlights

Polarization affects many forms of social organization
A sequence of generalizations followed, reviewed in ref. 12, toward a Structural balance theory (SBT) model in which nine of 16 triad types are permissible and the remainder set of seven are forbidden based on one or more violations of transitivity in a triad’s configuration of sentiments. This line of advancement was associated with empirical investigations of networks in field-settings as in ref. 14, which evaluated whether the distribution of observed triads over the 16 feasible types indicated a bias toward a set of SBT model-specific permitted triads
These temporal models are motivated by the idea that field-setting networks are undergoing transformations in which positive sentiments are being converted to negative sentiments, and vice versa, toward the attractor state of structural balance

Summary

Introduction

Polarization affects many forms of social organization. A key issue focuses on which affective relationships are prone to change and how their change relates to performance. 12, toward a SBT model in which nine of 16 triad types are permissible and the remainder set of seven are forbidden based on one or more violations of transitivity (if A likes B, and B likes C, A likes C) in a triad’s configuration of sentiments This line of advancement was associated with empirical investigations of networks in field-settings as in ref. This article reports findings from the most extensive set of longitudinal data yet assembled to evaluate the theory’s prediction of an evolution toward structural balance, and to investigate whether sentiment network states are linked with changing task performance metrics. Trader performance increases as the degree of a trader’s embedding in classical balanced triads increases, after accounting for individual trader differences and market uncertainty

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