Jump to ContentJump to Main Navigation
An Engine, Not a Camera – How Financial Models Shape Markets - MIT Press Scholarship Online
Users without a subscription are not able to see the full content.

An Engine, Not a Camera: How Financial Models Shape Markets

Donald Mackenzie


This book argues that the emergence of modern economic theories of finance affected financial markets in fundamental ways. These new, Nobel Prize-winning theories, based on elegant mathematical models of markets, were not simply external analyses but intrinsic parts of economic processes. Paraphrasing Milton Friedman, the author states that economic models are an engine of inquiry rather than a camera to reproduce empirical facts. More than that, the emergence of an authoritative theory of financial markets altered those markets fundamentally. For example, in 1970, there was almost no trading ... More

Keywords: Nobel Prize, Milton Friedman, financial derivatives, futures, finance theory, 1987 crash, hedge fund, Benoit Mandelbrot, wild randomness

Bibliographic Information

Print publication date: 2006 Print ISBN-13: 9780262134606
Published to MIT Press Scholarship Online: August 2013 DOI:10.7551/mitpress/9780262134606.001.0001


Affiliations are at time of print publication.

Donald Mackenzie, author