Markets can be performatively constructed by agents who are not atomistic homo economicus

Evidence

The study of the CBOE thus allows the question of performativity to be given a precise formulation. Why was option pricing theory so successful empirically? Was it because of the discovery of preexisting price regularities? Or did the theory succeed empirically because participants used it to set option prices? Did it make itself true? As will be seen, the answer is broadly compatible with Callon’s analysis. The CBOE, however, also demonstrates (even in a case favorable to the discovery of performativity) limits to the argument that homo œconomicus, though “not to be found in a natural state,” nevertheless “really does exist” (Callon 1998, p. 51). The very agents who performed option theory were not and did not become atomistic, amoral homines œconomici: if they had, they could not have constructed their market. — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 25

Categorization

• DEFINE: Defines the core Performativity research question this article sets out to answer, and stakes out the limits of the Callonian framing.
• SEED: The claim that non-atomistic, embedded, moral agents were precisely what was needed to construct the performative market is a sharp thesis worth an essay: performativity requires community, not atomism.
• XREF: connects to: A market model can shape markets actively rather than merely describing them — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1165; Market actors are calculative without becoming amoral atomistic egotists — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1186; Economic theory succeeded in derivatives markets partly by making markets conform to it — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 9 (+12 more)

Related

• Performativity has real limits; markets still need culture and trust (similarity 0.88)
• Option pricing converged on economic models through traders copying other users. (similarity 0.86)
• Market actors are calculative without becoming amoral atomistic egotists (similarity 0.86)
• Economic theory succeeded in derivatives markets partly by making markets conform to it (similarity 0.84)
• Purely atomistic economic actors may only exist as software, not humans. (similarity 0.83)
• Performativity claims must be distinguished from the market merely converging on a correct theory. (similarity 0.83)
• Markets are human creations amenable to redesign, not natural forces (similarity 0.83)
• A market model can shape markets actively rather than merely describing them (similarity 0.82)
• Performativity can only be judged through historical study of markets (similarity 0.81)
• Markets themselves can only be created by people who act against narrow self-interest (similarity 0.80)
• Market conditions moved toward the model’s assumptions partly because of the model itself (similarity 0.80)
• Option pricing theory did not describe markets but remade them in its own image (similarity 0.80)
• Economic theory, not trader demand, forged the proposal for the stock-options exchange (similarity 0.80)
• Traders using the pricing model actively made market prices conform to the model (similarity 0.79)
• Monetary and financial markets remain inseparable from the economy of regard (similarity 0.79)

Broader Connections

• A market model can shape markets actively rather than merely describing them #expands (0.90) — Donald MacKenzie, An Engine, Not a Camera, 1165
• Market actors are calculative without becoming amoral atomistic egotists #corroborates (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1186
• Markets are human creations amenable to redesign, not natural forces #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1237
• Markets operate as processual social systems shaped by trader practice, knowledge, and globality #expands (0.85) — Karin Knorr Cetina & Urs Bruegger, Global Microstructures, 35
• Economic theory succeeded in derivatives markets partly by making markets conform to it #exemplifies (0.80) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 9
• Neoliberals pursued an engineered order rather than expecting free markets to emerge naturally #exemplifies (0.80) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1907