Accumulating anomalies pointed toward a Kuhnian revolution in finance
Evidence
Anomalies such as the small-firm and turn-of-the-year effects could, therefore, be construed as evidence against the efficient-market hypothesis. In Kuhn’s analysis of the natural sciences, “a background of firm expectation makes anomalies and exceptions stand out and take on significance” (Barnes 1982, p. 20), and the accumulation of such anomalies was seen by Kuhn as the precursor of a scientific revolution. Jensen indeed suggested that the growing list of anomalies pointed in Kuhnian fashion to “a coming minirevolution in the field” (Jensen 1978, p. 95). — Donald MacKenzie, An Engine, Not a Camera, 426
Categorization
- DEFINE: Frames anomalies in Kuhnian terms — a background of expectation making deviations salient — which is foundational to how the performativity/critique literature reads anomalies.
- XREF: connects to: Persistent misunderstanding between Keynesian and Walrasian General Equilibrium paradigms in economics results from Kuhnian incommensurability rather than empirical failure or lack of clarity. — Cambridge, That Was: The Crucible of Heterodox Economics; Finance theory developed cumulatively like a technological cascade from Markowitz to trading room practice — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1090; Anomaly-identification followed by trading strategies shrank the anomalies themselves — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1151 (+3 more)
Broader Connections
- Finance theory developed cumulatively like a technological cascade from Markowitz to trading room practice
#contradicts(0.88) — Donald MacKenzie, An Engine, Not a Camera, 1090 - The efficient market hypothesis survived every empirical refutation and became finance orthodoxy
#complicates(0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 758 - Anomaly-identification followed by trading strategies shrank the anomalies themselves
#exemplifies(0.75) — Donald MacKenzie, An Engine, Not a Camera, 1151