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Constructing a market, performing theory: the historical sociology of a financial derivatives exchange

MacKenzie, Donald and Millo, Yuval (2003) Constructing a market, performing theory: the historical sociology of a financial derivatives exchange. American Journal of Sociology, 109 (1). pp. 107-145. ISSN 0002-9602

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Abstract

This analysis of the history of the Chicago Board Options Exchange explores the performativity of economics, a theme in economic sociology recently developed by Callon. Economics was crucial to the creation of financial derivatives exchanges: it helped remedy the drastic loss of legitimacy suffered by derivatives in the first half of the 20th century. Option pricing theory—a “crown jewel” of neoclassical economics—succeeded empirically not because it discovered preexisting price patterns but because markets changed in ways that made its assumptions more accurate and because the theory was used in arbitrage. The performativity of economics, however, has limits, and an emphasis on it needs to be combined with classic themes in economic sociology, such as Granovetterian embedding and the way in which exchanges can be cultures and moral communities in which collective action problems can be solved.

Item Type: Article
Official URL: http://www.journals.uchicago.edu/toc/ajs/current
Additional Information: © 2003 The University of Chicago
Library of Congress subject classification: H Social Sciences > HG Finance
H Social Sciences > HM Sociology
Sets: Departments > Accounting and Finance
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 09 Oct 2008 15:18
URL: http://eprints.lse.ac.uk/17906/

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