Barnesian performativity means models create the price patterns they describe

Evidence

“I have conceived of a society,” writes Barnes, “as a distribution of selfreferring knowledge substantially confirmed by the practice it sustains” (1988, p. 166). The Black-Scholes-Merton model informed practices such as spreading, and those practices in their turn helped to create patterns of prices of which the model was a good empirical description. In that sense, the performativity of the model was indeed Barnesian. — Donald MacKenzie, An Engine, Not a Camera, 148

Categorization

• DEFINE: Defines the ‘Barnesian performativity’ concept that anchors the whole book — self-referring knowledge confirmed by the practice it sustains.
• XREF: connects to: Performativity and efficiency both potentially explain the formula’s growing accuracy. — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 131; Studying performativity forces attention to the very market objects economics analyzes. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 101; Option pricing theory serves as the test case for performativity. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 124 (+8 more)

Broader Connections

• Market actions based on efficient-market models can create anomalies those models cannot explain #exemplifies (0.90) — Donald MacKenzie, An Engine, Not a Camera, 1166
• Traders’ arbitrage activity made the pricing model appear empirically true #exemplifies (0.90) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 126
• Arbitrage is the chief channel achieving Barnesian performativity in finance #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1209
• The model’s use helped create the price patterns the model predicted #corroborates (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1154
• CAPM shows no evidence of Barnesian performativity in pricing #contradicts (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1147