Black-Scholes-Merton theory shaped exchange fortunes before markets changed to match it.

Evidence

In these and other respects, however, the world of the early 1970s was starting to change. Even before it had altered much, Black-Scholes-Merton option theory began to affect the fortunes of options exchanges and even the patterns of prices on them. — Donald MacKenzie, An Engine, Not a Camera, 629

Categorization

• DEEPTHINKING: This is the crux of the performativity thesis — theory had causal market effects even while its assumptions were false. Confirms the book’s central claim in compressed form.
• XREF: Directly prefigures the efficient-market-hypothesis discussion: models shaping market patterns even when descriptively inaccurate. — connects to: The Black-Scholes model gained market traction slowly, not through instant self-fulfilling prophecy. — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 111; The Black-Scholes methodology reshaped economists’ and regulators’ thinking beyond derivatives. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 99; The discovery-then-acceptance narrative misdescribes how financial economics shaped markets — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 386 (+5 more)

Broader Connections

• Economic theory succeeded in derivatives markets partly by making markets conform to it #corroborates (0.95) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 9
• The discovery-then-acceptance narrative misdescribes how financial economics shaped markets #corroborates (0.85) — Donald MacKenzie, An Engine, Not a Camera, 386
• Finance theory altered its own empirical object of study #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 388
• Market prices converged toward Black-Scholes values within a few years of the CBOE’s founding #exemplifies (0.85)
• Option market prices initially diverged from the Black-Scholes model but converged #qualifies (0.75) — Donald MacKenzie, An Engine, Not a Camera, 735