The equilibrium degree of disequilibrium thesis sat outside orthodox financial economics.
Evidence
- That markets cannot achieve full informational efficiency that “there is an equilibrium degree of disequilibrium” is the claim of Grossman and Stiglitz (1980, p. 393), but their work was not orthodox financial economics. — Donald MacKenzie, An Engine, Not a Camera, 1630
Categorization
- XREF: Connects to the field’s performativity thesis: the Grossman-Stiglitz challenge to the efficient market hypothesis was treated as heterodox, which reinforces how orthodoxy shaped what counted as legitimate finance.
- QUESTION: Worth chasing: why and how did the efficient-market orthodoxy exclude Grossman-Stiglitz’s information-arbitrage limits, and when did that exclusion erode?