Software performance measurement changed manager behavior even without their understanding CAPM
Evidence
Even for managers who were doing no more than paying lip service to finance theory, the theory’s incorporation into market infrastructure mattered. As chapter 3 suggested, stock-picking managers knew that their investment performance was increasingly being monitored by software-implemented measurement systems. They might not fully have understood those systems’ foundations in the Capital Asset Pricing Model, but their behavior changed nonetheless. Many became “closet” index trackers, their self-perceived stockpicking skills limited to modest over-weighting or under-weighting of particular stocks or sectors. — Donald MacKenzie, An Engine, Not a Camera, 1137
Categorization
- XREF: Strong connection to the ‘black-boxing’ theme in science studies (Latour) and to the idea that models act through infrastructure even when users misunderstand them. — connects to: Quantitative performance measurement was resisted by investment managers it threatened — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 363; Managers benchmarked to an index converge on closet indexing to avoid career risk — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 381; Regulatory use of CAPM could generate model-compliant returns but remains untested empirically — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1150 (+2 more)
- DEEPTHINKING: This is a dense point: performativity works not through belief or understanding but through embedded infrastructure acting on behavior regardless of comprehension — a genuinely subtle mechanism claim.
Broader Connections
- Regulatory use of CAPM could generate model-compliant returns but remains untested empirically
#qualifies(0.80) — Donald MacKenzie, An Engine, Not a Camera, 1150 - Fama attributed anomalies to CAPM flaws, not market inefficiency.
#corroborates(0.72) — Donald MacKenzie, An Engine, Not a Camera, 430