Technical trading in the Santa Fe Institute Artificial Stock Market revisited

This paper reconsiders evidence of technical trading in the Santa Fe Artificial Stock Market in light of an upwardly biased mutation operator. While an alternative mutation operator points to no technical trading, two tests other than the inappropriate investigation of the aggregate bit level establish the existence of technical trading beyond a doubt. The following analysis of the two mutation operators identifies genetic drift as an important evolutionary force and provides tools to judge the relative importance of selection and genetic drift with arbitrary mutation operators. It also finds that when selective forces are weak, the continued existence of technical trading can be reconciled with the Efficient Market Hypothesis.