The discovery-then-acceptance narrative misdescribes how financial economics shaped markets

Evidence

Because a significant body of practitioner opinion came gradually to embrace at least some of the conclusions of financial economics, it is tempting to tell the latter’s story within the familiar frame of scientific “discovery,” practitioner resistance, and then eventual acceptance. Such a framing, however, would fail to capture the historical process involved in several respects. Most importantly, it would be misleading to present the development of financial economics as simply the discovery of what was out there all along, waiting to be discovered. — Donald MacKenzie, An Engine, Not a Camera, 386

Categorization

• XREF: Sets up the core of the performativity thesis: models don’t discover pre-existing reality, they help constitute it. Connects to Callon’s performativity framing. — connects to: Financial instruments shape markets rather than merely read them — Max Haiven, Cultures of Financialization, 401; Financial economics actively alters markets rather than merely describing them — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 64; Practitioners knew market anomalies before academics documented them — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 425 (+10 more)

Broader Connections

• Finance theory altered its own empirical object of study #corroborates (0.90) — Donald MacKenzie, An Engine, Not a Camera, 388
• Economic theory succeeded in derivatives markets partly by making markets conform to it #corroborates (0.85) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 9
• The skew’s persistence after 1987 undermines the discovery narrative of option pricing #exemplifies (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1163
• A market model can shape markets actively rather than merely describing them #corroborates (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1165
• Finance theory shapes markets through the linguistic infrastructure it provides practitioners #corroborates (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1128