Economy and Society, 49(4):562-595.
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Weber famously invoked “ideal types” as an analytic device with which to measure empirical reality against some hyper-rational fabrication. Case in point: non-professional (lay) investors appear to be the antithesis of rational economic man. They have been cast as less-informed, less-skilled, and less-knowledgeable than professional market practitioners, and with ample evidence that they tend to lose money in the market as a result. This study builds the case that a new class of algorithmic financial advisor, commonly known as “roboadvisors”, enacts lay investors as rational market actors. This is achieved through algorithmic devotion to modern portfolio theory (MPT)…