Why Discovery Layers Guarantee Crowded Alpha: A Design Case for Quality-Diversity Search in Agentic Trading Systems

Hadi Soufi

Abstract

This paper argues that a discovery layer optimized only for predictive quality has no mechanism to penalize redundancy, creating structural pressure toward a small set of familiar factor families. It develops a crowding-by-construction argument and translates quality-diversity search into an objective specification for a discovery layer.

Read on SSRN

Cite

Soufi, H. (2026). Why Discovery Layers Guarantee Crowded Alpha: A Design Case for Quality-Diversity Search in Agentic Trading Systems. SSRN Working Paper. https://ssrn.com/abstract=7488920

@misc{soufi2026discovery,
  author       = {Soufi, Hadi},
  title        = {Why Discovery Layers Guarantee Crowded Alpha: A Design Case for Quality-Diversity Search in Agentic Trading Systems},
  year         = {2026},
  howpublished = {SSRN Working Paper},
  url          = {https://ssrn.com/abstract=7488920}
}

Copy BibTeX