Frank Partnoy’s Wait: The Art and Science of Delay has been described as “counterintuitive and insightful.”

The book weaves together a fascinating series of research findings and scientific studies in the fields of cognitive science, bio-mechanics, and psychology to create this fascinating book.

In a world that is too impatient for even instant gratification, Partnoy paints a very different picture of optimizing  decision-making that runs counter to the usual go-go-go approach. Think of Wait as an effective bit of counter-programming to Malcolm Gladwell’s overrated Blink.

Using varied time frames — milliseconds to years — Partnoy describes how to take advantage of controlling your response times to obtain better results.

Its fascinating stuff — I am only a third of the way through, but felt compelled to post this because how much I am enjoying it.

Selected reviews are below, and a section of the book is after the jump.



Roger Lowenstein, author of When Genius Failed and The End of Wall Street
“Having mined the best of American research in fields as wide-ranging as finance, behavioral economics, and law, Frank Partnoy has written a beguilingly readable treatise that boils down to a single, easily digestible conclusion: in our busy modern lives, most of us react too quickly. Wait will naturally and rightly be compared to Daniel Kahneman’s Thinking, Fast and Slow as a trail-blazing book exploring the hidden crannies and the treacherous pitfalls of human decision-making. I whole-heartedly recommend it.”

Bethany McLean, co-author of The Smartest Guys in the Room and All the Devils Are Here
Wait is one of those rare books that will change not just the way you think, but the way you act. The book is full of ideas that are fascinating, useful—and at times mind-blowing. I was captivated.”

Daniel H. Pink, author of Drive and A Whole New Mind
“Frank Partnoy turns conventional wisdom on its head with this counterintuitive approach to decision-making. Rather than telling us how to make decisions faster and faster, he mines and refines a rich lode of information from experts in a surprising variety of fields to demonstrate the power of delay, whether measured in milliseconds, days, or decades. Wait is a great read, chock full of fascinating insights.”

Margaret Heffernan, CBS Money Watch
“Marvelous … Wait is an impassioned and thought-provoking book.”

Christopher Chabris, Wall Street Journal
“Mr. Partnoy’s intention in Wait is to take on those who evangelize the power of thinking quickly, ‘getting things done’ and leading an organized life. We can praise efficiency but fail to take note of what is sacrificed in its name. Wait offers a valuable counterweight to this attitude, reminding us that quality should matter as much as speed.”

“Mr Partnoy argues that too many people fail to recognize what good public speakers and comedians all understand: that success depends on knowing when to delay, and for how long.”

Financial Times
“A superior example of the genre. It is a departure from his earlier books about financial crises, but written with the same easy elegance. … Partnoy makes mincemeat of the idea of ‘thin slicing’ – the art of making snap decisions based on very little information – that was made so popular by Malcolm Gladwell in Blink. … As a collection of fascinating case studies, Wait is a gem.”
Winnipeg Free Press
“While the breadth and the depth of his research gives the book’s rather straightforward message its complexity and rhetorical power, the book’s charm comes from Partnoy’s ability to juggle such seemingly disparate topics as, on the one hand, an engaging discussion of recent science on animals and their conceptualization of future time and, on the other hand, an unabashedly doting analysis of the comic timing of Jon Stewart.”


Wait: The Art and Science of Delay
By Frank Partnoy

Adapted from WAIT: The Art & Science of Delay (Public Affairs; June 26, 2012)

In the middle of 2006, the stock trading firm UNX, Inc., found itself in trouble. The company was seven years old, nearly a lifetime in the dog-year world of high-frequency securities trading. Its technology was dated. Its computer platforms were falling behind, and its clients, including sophisticated hedge funds and Wall Street banks, were shifting to competitors. To survive, UNX needed to build a more efficient trading platform that could compete with other superfast trading firms.

André Perold, then the chair of UNX’s board and the head of Harvard Business School’s Finance Department, understood the problem, and he knew just who to call. The core of UNX’s business was trading securities on behalf of sophisticated clients who wanted to buy and sell cheaply, quickly, and anonymously. At one level, Perold understood that UNX needed a “quant,” someone who grasps mathematical algorithms. But he also knew there is an art to split-second securities trading. Scott Harrison, the man Perold called, told me about Perold’s pitch: “He said we were going to save UNX. We’d raise money from some Wall Street banks and build a brand-new platform with the best trading technology. It was going to be a serious challenge, but also an exciting opportunity. Our goal was to become faster and cheaper than anyone.”

Harrison was one of a handful of people in the world who had the two skill sets the UNX job required. He had managed algorithmic trading operations, including complicated computer programs such as Triton and QuantEX. But Harrison also was a visionary and a builder. Most managers of high-frequency firms spend their careers trading stocks and crunching numbers. Before Harrison began working in finance, he was an architect at Skidmore, Owings & Merrill.

When I first spoke to Harrison, on a fall weekday in 2010, he wasn’t trading. He was cooking, taking a break from a home renovation project. Harrison was what some technology CEOs call “in between brilliant ideas.” (He later joined Liquidnet, a large global trading network, as global head of product.) He was eager to tell me what had happened at UNX after he joined: “I’m not sure anyone really understands what happened. I think about it all the time, but I still don’t get it. There’s no word for it. It was just weird.”

Harrison joined UNX in July 2006, and after a three-month transition he took over as the firm’s chief executive. When André Perold made the public announcement, he praised Harrison and proclaimed, “We are confident UNX has a bright future under his management.” Harrison and UNX quickly raised money and built a cutting-edge computer trading system. Both the hardware and software were designed to be faster and therefore more efficient. Harrison set up the new machines in a second-floor office in Burbank, California, two blocks east of Interstate 5, three thousand miles from Wall Street. Then he flipped the switch.

Harrison believed a faster trading system would be more profitable. He thought UNX’s speedy new computer platform would enable it to compete with larger, better-funded firms. He was right: Harrison and UNX won the arms race of high-frequency trading, at least for a while. But it wasn’t for the reasons they anticipated.

When UNX switched on its new computers, its trading costs immediately plummeted. The new platform supercharged UNX’s business. Suddenly the firm could buy and sell shares at a lower cost than just about anyone else. Clients rushed to do business with them.

As word spread, other Wall Street brokers struggled to figure out how UNX had become so good so quickly. As Harrison put it, “We were fighting against people who were really fast—Lehman, UBS, Jones Trading—and now we were winning. One day we were nobodies, and then overnight we were the best. They used to call all the time and ask, ‘Who are you guys, and why the hell are you at the top of the list?’” Harrison was thrilled, and he was a hero.

By the end of 2007, UNX was in fact at the top of the list. The Plexus Group rankings of the leading trading firms hadn’t even mentioned UNX a year earlier. Now UNX was at the top, in nearly every relevant category.

Harrison is the sort of leader who is always asking how things can be improved even when they are going very well. Although UNX’s new trading platform was a huge success, he thought they could do even better by moving their computers three thousand miles from Burbank to New York, closer to the trading facilities of the New York Stock Exchange and NASDAQ, where most trades were completed. At the time, few people had focused on the travel time of trades. But Harrison understood that geography was causing delay: even at the speed of light, it was taking UNX’s orders a relatively long time to move across the country.

He studied UNX’s transaction speeds and noticed that it took about sixty-five milliseconds from when trades entered UNX’s computers until they were completed in New York. About half of that time was coast-to-coast travel. Closer meant faster. And faster meant better. So Harrison packed up UNX’s computers, shipped them to New York, and then turned them back on.

This is where the story gets, as Harrison put it, weird. He explains: “When we got everything set up in New York, the trades were faster, just as we expected. We saved thirty-five milliseconds by moving everything east. All of that went exactly as we planned.”

“But all of a sudden, our trading costs were higher. We were paying more to buy shares, and we were receiving less when we sold. The trading speeds were faster, but the execution was inferior. It was one of the strangest things I’d ever seen. We spent a huge amount of time confirming the results, testing and testing, but they held across the board. No matter what we tried, faster was worse.”

“Finally, we gave up and decided to slow down our computers a little bit, just to see what would happen. We delayed their operation. And when we went back up to sixty-five milliseconds of trade time, we went back to the top of the charts. It was really bizarre. I mean, there we were in the most efficient market in the world, with trillions of dollars changing hands every second, and we’d clearly gotten faster moving to New York. And yet we’d also gotten worse. And then we improved by slowing down. It was the oddest thing. In a world that values speed so much, you could be slower, yet still be better.”

What happened to UNX seems strange, almost mystical. Yet UNX’s experience is common in modern communication technology. For some tasks, the best approach is to send data as quickly as possible. But for others, the earliest signal is too early. How fast you should be depends on what you are doing. Sometimes it is better to be later.

Source: Wait: The Art and Science of Delay (Frank Partnoy)

Category: Books, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Wait: The Art and Science of Delay”

  1. [...] « Wait: The Art and Science of Delay [...]

  2. Mike in Nola says:

    Gee, this was a disappointment. I thought it was going to be an affirmation of my mañana method of dealing with demands from the immediately family to get things done :)

  3. Clem Stone says:

    Destined to become the can-kickers’ bible.

  4. machinehead says:

    In using momentum as a selection factor for individual stocks, it’s widely recognized that one-month momentum often reverses, while longer-period momentum tends to continue (trend).

    Maybe some similar short-term reversal phenomenon is at work in the microstructure of high-frequency execution.

    It’s odd that Harrison can’t figure out what it is. Bring in the academicians!

  5. These are important considerations…

    And may have much to do with the differences between a mob and a crowd…

    With that in mind I’m well aware of the danger in what I envision as a political ‘live debate’ application in conjunction with a real time micro-contribution capability.

    As this author recognizes… such a system could certainly promote just the sort of ‘instant’ decision making that could be more akin to mob action that crowd wisdom.

    However, this can be addressed via a rules structure for such a system that both acknowledges that tendency and its potential dangers (its an invitation to demagoguery) while counteracting them and simultaneously improving critical capabilities within the electorate.

    IF… the contribution is handled as a ‘contingent pledge’ with some pre-determined delay between that pledge and a transfer of funds… and with a right to rescind.

    Then opportunity can be provided for ‘post-debate’ discussion (via media or local and person-to-person) and deeper consideration as well as counter-argument over that period of time.

    A capable electorate must be cultivated.

  6. machinehead says:

    By the way, the 35 millisecond delay cited in the book excerpt checks out. Divide a 6,500-mile round trip from N.Y. to L.A. by the speed of light (186,000 miles/sec), and 35 milliseconds is the travel time.

    Here’s what confounds me: not knowing what they later discovered about its benefit, why would high frequency traders have intentionally set themselves up with a 35-millisecond disadvantage by locating their computers ‘in a second-floor office in Burbank, California, two blocks east of Interstate 5′?

    Is it really possible that this elementary fact of physics never occurred to the head of Harvard Business School’s Finance Department who chaired the board?

  7. ethanard says:

    “Using varied time frames — milliseconds to years — Partnoy describes how to take advantage of controlling your response times to obtain better results.

    Its fascinating stuff — I am only a third of the way through, but felt compelled to post this because how much I am enjoying it.”

    Irony much?


    BR: Exactly!

  8. [...] An except from Frank Partnoy’s Wait: The Art and Science of Delay.   (Big Picture) [...]

  9. [...] that: HFT doesn’t just break in unpredictable ways, but works in unpredictable ways, too. Barry Ritholtz has an excerpt from Frank Partnoy’s new book, Wait, all about an HFT shop in California [...]