LTCM’s failure was a self-fulfilling prophecy like that described by Robert Merton

Evidence

Finally, in September 1998, LTCM itself became the subject of a self-fulfilling prophecy of failure strikingly similar to the classic example of such a process given in 1948 by Robert K. Merton. — Donald MacKenzie, An Engine, Not a Camera, 156

Categorization

• XREF: Robert K. Merton’s self-fulfilling prophecy is the sociological ancestor of the performativity thesis; the author here ties the LTCM collapse to that lineage, an echo of the book’s whole argument. — connects to: LTCM’s near-collapse was commonly blamed on blind faith in financial models — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 152
• QUESTION: Worth chasing: how does the self-fulfilling-prophemy framing of LTCM relate to the later, more precise ‘Barnesian’ performativity the book develops?

Broader Connections

• LTCM’s near-collapse was commonly blamed on blind faith in financial models #complicates (0.80) — Donald MacKenzie, An Engine, Not a Camera, 152