Cold rational egoism cannot explain the founding of modern derivatives exchanges

Evidence

Of course, avowals of altruism sometimes mask self-interest, but for a rational egoist to embark on a project like the creation of the International Monetary Market or the Chicago Board Options Exchange, in a context in which all others are rational egoists, is implausible. A risk-neutral egoist would need to be confident that the expected personal benefits of the creation of the new markets exceeded the total costs of establishing them (others must be expected to free-ride, so the founder must expect to bear all these costs); for a risk-averse egoist, the excess might have to be considerable. Given the considerable ex ante uncertainty whether the new markets would prosper many members of the Board of Trade opposed the options exchange as a likely waste of money these conditions are unlikely, and my interviews give no suggestion that they were met. — Donald MacKenzie, An Engine, Not a Camera, 678

Categorization

• DEFINE: Lays out the precise conditions a rational-egoist founding story would need (risk-neutrality, expected private benefit exceeding total cost), making the counterargument concrete.
• XREF: Connects to the broader performativity/social-studies-of-finance literature that challenges homo economicus assumptions in economics itself. — connects to: Pure rational self-interest cannot explain founding a derivatives exchange; Academic theory directly motivated the creation of the organized options exchange — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 651; Building financial derivatives exchanges demanded large unpaid, personally costly commitments from organizers — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 671 (+3 more)

Broader Connections

• Narrow self-interest does not automatically produce efficient exchange #corroborates (0.82)