دانلود رایگان مقاله چشم انداز متنوع در اپیستمه و تکنه در امور مالی

Abstract

The debates on the Black and Scholes model shed light on the distinction between practices (i.e. inductive know-how or techne) and theory (i.e. deductive know-why or episteme) in finance. We revisit the classical distinction, still accepted widely in the literature, between episteme and techne and develop a nuanced view by introducing two other levels of knowledge we will call “commanding knowledge” (epitaktike) and “practical wisdom” (phronesis). The major contribution of this paper is to use these four levels of knowledge (episteme, epitaktike, techne and phronesis) in order to highlight how this model subtly influenced financial practices by shaping the microstructure of the emerging Chicago Board Options Exchange (CBOE). Our analysis will then be completed by a re-interpretation of the existing literature about the performativity of the BSM model to show how these levels of knowledge combined each other in the evolution post-crash (1987) financial practices.

5. Conclusion

Through the production of different levels of knowledge, scientific practices directly influence the social practices (Golinski, 2005): by emphasizing the interactions between the BSM model and the techno-social environment of finance in the 1970s, this paper nuances the Aristotelian distinction bewteem episteme and techne that Haug and Taleb (2011) used in their reflection on the BSM model. More precisely, we provide empirical evidence about the emergence of the CBOT in the 1970s to improve our understanding of the diffusion of scientific knowledge from academic department to practices in finance. In the case of the BSM model, this diffusion process took different forms: we explained how the model (episteme) provided the conceptual framework in order to justify a specific organisation of the CBOT market. This contextualized knowledge has been associated with what Plato called a commanding knowledge (epitaktike). In this configuration, market makers used this knowledge to justify their position on the market by claiming they did not seek for profit but rather for the liquidity of the market in accordance with a specific practical wisdom (phronesis). Finally, the last section proposed a re-interpretation of the literature on the performativity of the BSM model in order to show that the four levels of knowledge we identified in this article (episteme, epitaktike, techne and phronesis) can also be found in the evolution of financial practices before and after the 1987 crash. This financial event, led market participants to adjust their implementation of the BSM model. So doing, they developed a specific practical wisdom (phronesis) by using this model as a counter-benchmark rather than as a directive framework. In the light of the case-study presented in this article, the strict distinction between episteme and techne regarding the use of the BSM model is not an easy task simply because we identify two other additional levels of knowledge that can be associated with this model. The following table (Table 2) summarized these four levels of knowledge concerning the BSM model,