Ascent of Market Efficiency

Simone Polillo

Description

The Ascent of Market Efficiency weaves together historical narrative and quantitative bibliometric data to detail the path financial economists took in order to form one of the central theories of financial economics-the influential efficient-market hypothesis-which states that the behavior of financial markets is unpredictable.As the notorious quip goes, a blindfolded monkey would do better than a group of experts in selecting a portfolio of securities, simply by throwing darts at the financial pages of a newspaper. How did such a hypothesis come to be so influential in the field of financial economics? How did financial economists turn a lack of evidence about systematic patterns in the behavior of financial markets into a foundational approach to the study of finance?Each chapter in Simone Polillo's fascinating meld of economics, science, and sociology focuses on these questions, as well as on collaborative academic networks, and on the values and affects that kept the networks together as they struggled to define what the new field of financial economics should be about. In doing so, he introduces a new dimension-data analysis-to our understanding of the ways knowledge advances.There are patterns in the ways knowledge is produced, and The Ascent of Market Efficiency helps us make sense of these patterns by providing a general framework that can be applied equally to other social and human sciences.

Sujets

• Sociologie, société et politique
• Minería de datos
• Sociology
• Data mining
• Finance
• Exploration de données

Informations

• Publié par: Cornell University Press
• Date de parution: 15 août 2020
• Nombre de lectures: 0
• EAN13: 9781501750397
• Langue: English
• Poids de l'ouvrage: 5 Mo

Extrait

THE ASCENT OF MARKET EFFICIENCY

THEASCENT OFMARKET EFFICIENCY Finance That Cannot Be Proven

SîmONe POlîllO

CORNELL UNIVERSITY PRESS ITHACA AND LONDON

Copyright © 2020 by Cornell University

All rights reserved. Except for brief quotations in a review, this book, or parts thereof, must not be reproduced in any form without permission in writing from the publisher. For information, address Cornell University Press, Sage House, 512 East State Street, Ithaca, New York 14850. Visit our website at cornellpress.cornell.edu.

First published 2020 by Cornell University Press

Library of Congress CataloginginPublication Data

Names: Polillo, Simone, 1978 author. Title: The ascent of market efficiency : finance that cannot be proven /  Simone Polillo. Description: Ithaca [New York] : Cornell University Press, 2020. |  Includes bibliographical references and index. Identifiers: LCCN 2019050409 (print) | LCCN 2019050410 (ebook) |  ISBN 9781501750373 (hardcover) | ISBN 9781501750380 (epub) |  ISBN 9781501750397 (pdf) Subjects: LCSH: Efficient market theory. | Economics—Sociological aspects. |  Knowledge, Sociology of. Classification: LCC HG101 .P656 2020 (print) | LCC HG101 (ebook) |  DDC 332—dc23 LC record available at https://lccn.loc.gov/2019050409 LC ebook record available at https://lccn.loc.gov/2019050410

Contents

1.  Introduction: The DataMethodTheory Triad, or Why Finance Cannot Be Proven 2.  The Rhetoric of Market Efficiency: How Data Analysis Became Legitimate 3.  Collaborations and Market Efficiency: The Network of Financial Economics 4.  Winners and Losers in Financial Economics, or Fama versus Black: How Markets Became Efficient and Equilibrium Was Defeated 5.  How Financial Economics Got Its Science 6.  Conclusion: A Network Sociology of Scholarly Affects

Acknowledgments Appendix A Appendix B Notes References Index

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THE ASCENT OF MARKET EFFICIENCY

INTRODUCTION The DataMethodTheory Triad, or Why Finance Cannot Be Proven

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Over the past half century, in the United States and many other countries, finance has become deeply enmeshed in, and consequential for, everyday life. Virtually ubiquitous and allpowerful, financial markets now play a fundamental role in determining the life chances of individuals, serving as indispensable sources of funding both for everyday necessities, as testified by the expansion of credit card– fueled expenses, and for lifelong savings strategies—witness the proliferation of longterm, heftier investments, from retirement portfolios to car loans and home mortgages. Therearemanycomplexreasonsbehindtheriseoffinancialmarkets,ranging from the emergence of institutional investors (i.e., nonfinancial institutions whose budgets rely on substantial trades in financial securities) to the political support national governments and international financial institutions have lent to the fi nancial sector over this multidecade period; from the move of mass production away from developed countries, and its replacement by financial activities, to the rise of globalization. Each of these dimensions has drawn substantial scholarly interest. We know less about how financial markets have gainedintellectual cred ibility: how financial economists successfully defend financial markets and make a case for their fundamental and positive role in the economy when they have failed to provide an analytically sound and theoretically robust framework to ex plain how markets behave. This puzzle is the focus of this book. In the 1950s, financial markets became the object of analysis of a new discipline—financial economics—and have shaped its evolution ever since. It would not be an exaggeration to say that the new discipline of financial economics

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