Economic performativity rests on human cognitive limits and mutual susceptibility

Evidence

There is thus a sense in which the capacity for economics to be performative arises from the cognitive limitations of human beings limitations that require standard models of the rational actor to be weakened. However, in order better to understand economic behavior, even in financial markets, it is also necessary to enrich standard models of the rational actor to encompass ways in which we affect each other that are not reducible to calculation in the ordinary sense of the word. We are often profoundly influenced by anticipation of how our behavior will appear to others, even if their approval or their disapproval has no direct material consequences. — Donald MacKenzie, An Engine, Not a Camera, 1197

Categorization

• DEFINE: Clarifies the dual movement (weakening and enriching the rational actor) that performativity requires, linking it to Scheff’s mutual susceptibility.
• XREF: Connects to the broader performativity literature and to Callon’s framing of economics as performative; also resonates with Barnes’ work on social theory the reader may know from adjacent reading. — connects to: Economic action as distributed cognition is what makes embedded theory genuinely performative. — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 200; Studying performativity forces attention to the very market objects economics analyzes. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 101; Human cognitive limits make simplifying concepts and calculating devices constitutive of complex markets. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1195 (+5 more)

Broader Connections

• Market mechanisms sometimes amplify rather than correct human cognitive limitations #corroborates (0.92) — Donald MacKenzie, An Engine, Not a Camera, 1207
• Human rationality is bounded by memory and computational limits and often violates rational maxims #corroborates (0.90) — John T. Jost and Jim Sidanius, Political Psychology, 2408
• Markets act as cognitive prostheses enabling outcomes beyond individual rationality #qualifies (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1206
• Failed prediction exposed latent flaws in the rational economic agent concept #exemplifies (0.75) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 696