A market model can shape markets actively rather than merely describing them

Evidence

The empirical success of the Black-Scholes-Merton model was a historically contingent process in which the model itself played a constitutive role. To say that is in no way to diminish the brilliant achievement of Black, Scholes, and Merton; it would be a curious prejudice to see a theory that changed the world (as their theory did) as inferior to one that merely reported on it. Rather, it is to assert that the model was a theoretical innovation, not simply an empirical observation; that the model’s relation to the market was not always passive, but sometimes active; that its role was not always descriptive, but sometimes performative, even in the strongest, Barnesian sense. An engine, not a camera. — Donald MacKenzie, An Engine, Not a Camera, 1165

Categorization

• DEFINE: Crystallizes the book’s core thesis: performative (Barnesian) models act as engines, not cameras — the defining statement of the whole work.
• DEEPTHINKING: The densest, most paradigm-shifting statement of the performativity thesis in the book’s framing — the engine-not-camera metaphor in its strongest, full expression.
• XREF: connects to: Critical finance studies treat markets as discursively constituted rather than merely material — Aris Komporozos-Athanasiou, Speculative Communities: Living with…, 578; Markets can be performatively constructed by agents who are not atomistic homo economicus — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 25; Market conversations do not merely transmit information but perform the economic action itself — Karin Knorr Cetina & Urs Bruegger, Global Microstructures: The Virtual…, 29 (+25 more)

Broader Connections

• Economics actively shapes the economy rather than merely describing it #corroborates (0.95) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1987
• Traders’ arbitrage activity made the pricing model appear empirically true #exemplifies (0.90) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 126
• Economic theory succeeded in derivatives markets partly by making markets conform to it #exemplifies (0.88) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 9
• Market actions based on efficient-market models can create anomalies those models cannot explain #exemplifies (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1166