This article appeared in:
Wilmott Magazine,
March 2010
Not Right but Good
Brian Sentance speaks to Yuval Millo about derivatives pricing, social sciences, and how the model became the market.
Performativity, according to John Longshaw Austin, is an utterance that performs an act. In economics, performativity refers to the interplay between theories of the economy and the economy. In the words of Michael Callon, the economy is performed by economic practices. In the broader sense of the term, economics performs, shapes, and formats the economy, rather than passively observing how it functions. Yuval Millo, a researcher and lecturer in accounting at the London School of Economics and Political Science (LSE) suggests that the adoption of the Black–Scholes model represents a strong example of performativity in economics.
