Performativity claims must be distinguished from the market merely converging on a correct theory.

Evidence

However, perhaps the Black-Scholes formula came to be adopted, and came to describe prices accurately, simply because it was “right,” because it gave the correct way to price options? Perhaps the poor early fit of the formula was just a passing consequence of an inefficient market, fated to diminish as the CBOE reached efficiency? If that were so, a claim of performativity would be an empty gloss on a process better understood in conventional economic terms. — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 131

Categorization

• DEFINE: Sharpens the performativity thesis by stating the rival ‘correct theory’ explanation it must defeat — the falsification standard that makes performativity a real claim rather than cheap gloss.
• XREF: connects to: Performativity has real limits; markets still need culture and trust — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 25; Observing economics used in markets does not prove it shapes them. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 88; Using a model can make markets conform less well to it. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 92 (+3 more)

Related

• Performativity and efficiency both potentially explain the formula’s growing accuracy. (similarity 0.91)
• Studying performativity forces attention to the very market objects economics analyzes. (similarity 0.87)
• Using a model can make markets conform less well to it. (similarity 0.87)
• Financial theories can become true by guiding the practices they describe (similarity 0.87)
• Gradual market learning is the rival explanation to performativity (similarity 0.87)
• The market changed to fit Black-Scholes rather than the reverse (similarity 0.86)
• Judging whether markets conform to a model is itself a contested process. (similarity 0.86)
• Performativity can only be judged through historical study of markets (similarity 0.85)
• Performativity shifts analysis from model accuracy to model use effects (similarity 0.85)
• Option pricing theory serves as the test case for performativity. (similarity 0.85)
• Barnesian performativity means models create the price patterns they describe (similarity 0.85)
• Not every authoritative formula can make itself true; only viable ones become performative. (similarity 0.85)
• Economics is effectively performative only when using it changes market outcomes. (similarity 0.85)
• Market conditions moved toward the model’s assumptions partly because of the model itself (similarity 0.84)
• A market model can shape markets actively rather than merely describing them (similarity 0.84)

Broader Connections

• Economics is effectively performative only when using it changes market outcomes. #qualifies (0.80) — Donald MacKenzie, An Engine, Not a Camera, 87
• Observing economics used in markets does not prove it shapes them. #expands (0.75) — Donald MacKenzie, An Engine, Not a Camera, 88
• Using a model can make markets conform less well to it. #expands (0.75) — Donald MacKenzie, An Engine, Not a Camera, 92
• Barnesian performativity means models create the price patterns they describe #expands (0.75) — Donald MacKenzie, An Engine, Not a Camera, 148
• Economic theories function as analytic engines rather than exact copies of reality. #responds-to (0.72)