Observing economics used in markets does not prove it shapes them.

Evidence

Except in the simplest cases, one cannot expect observation alone to reveal the effect of the use of an aspect of economics. One cannot assume, just because one can observe economics being used in an economic process, that the process is thereby altered significantly. It might be that the use of economics is epiphenomenal an empty gloss on a process that would have had essentially the same outcomes without it, as Mirowski and Nik-Khah (2004) in effect suggest was the case for the celebrated use of “game theory” from economics in the auctions of the communications spectrum in the United States. — Donald MacKenzie, An Engine, Not a Camera, 88

Categorization

• XREF: The Mirowski and Nik-Khah spectrum-auction case is the classic counterexample debated throughout science-studies literature on performativity. — connects to: Aggregate market outcomes cannot be inferred directly from traders’ deal-making rationales. — Karin Knorr Cetina & Urs Bruegger, Global Microstructures: The Virtual…, 19; Financial economics actively alters markets rather than merely describing them — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 64; Economics is effectively performative only when using it changes market outcomes. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 87 (+4 more)

Broader Connections

• A market model can shape markets actively rather than merely describing them #complicates (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1165
• Using a model can make markets conform less well to it. #corroborates (0.82) — Donald MacKenzie, An Engine, Not a Camera, 92
• Economic theories function as analytic engines rather than exact copies of reality. #expands (0.78)