For What It’s Worth: Historical Financial Bubbles and the Boundaries of Economic Rationality

This essay is a historical and epistemological exploration of a traditionally crazy economic event: the financial bubble. Venturing into two different moments in the history of economic thinking, it investigates financial bubbles as epistemic frontiers, where rationality has reached its limits. The...

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Main Author: Deringer, William P
Other Authors: Massachusetts Institute of Technology. Program in Science, Technology and Society
Format: Article
Language:en_US
Published: University of Chicago Press 2018
Online Access:http://hdl.handle.net/1721.1/116282
https://orcid.org/0000-0002-5010-345X
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author Deringer, William P
author2 Massachusetts Institute of Technology. Program in Science, Technology and Society
author_facet Massachusetts Institute of Technology. Program in Science, Technology and Society
Deringer, William P
author_sort Deringer, William P
collection MIT
description This essay is a historical and epistemological exploration of a traditionally crazy economic event: the financial bubble. Venturing into two different moments in the history of economic thinking, it investigates financial bubbles as epistemic frontiers, where rationality has reached its limits. The first half forays into late twentieth-century economics. Since 1980, an interpretive battle over the ir/rationality of bubbles has made those peculiar events, long beyond the pale of the rational, contested terrain on which the limits of rationality have been fought out. The essay’s second half turns to one historical crisis, the South Sea Bubble. For contemporaries in 1720, the bubble was a different kind of epistemic frontier. As they tried to reckon what South Sea Company stock was worth, investors were confronted not with clearly rational or irrational choices but with a decidedly unruly collection of similarly plausible calculations. The story of 1720 suggests that studying historical confusion might be a profitable enterprise for scholars of the economic and epistemological past.
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spelling mit-1721.1/1162822022-09-27T23:42:47Z For What It’s Worth: Historical Financial Bubbles and the Boundaries of Economic Rationality Deringer, William P Massachusetts Institute of Technology. Program in Science, Technology and Society Deringer, William Deringer, William P This essay is a historical and epistemological exploration of a traditionally crazy economic event: the financial bubble. Venturing into two different moments in the history of economic thinking, it investigates financial bubbles as epistemic frontiers, where rationality has reached its limits. The first half forays into late twentieth-century economics. Since 1980, an interpretive battle over the ir/rationality of bubbles has made those peculiar events, long beyond the pale of the rational, contested terrain on which the limits of rationality have been fought out. The essay’s second half turns to one historical crisis, the South Sea Bubble. For contemporaries in 1720, the bubble was a different kind of epistemic frontier. As they tried to reckon what South Sea Company stock was worth, investors were confronted not with clearly rational or irrational choices but with a decidedly unruly collection of similarly plausible calculations. The story of 1720 suggests that studying historical confusion might be a profitable enterprise for scholars of the economic and epistemological past. 2018-06-12T19:26:19Z 2018-06-12T19:26:19Z 2015-09 2015-02 Article http://purl.org/eprint/type/JournalArticle 0021-1753 1545-6994 http://hdl.handle.net/1721.1/116282 Deringer, William. “For What It’s Worth: Historical Financial Bubbles and the Boundaries of Economic Rationality.” Isis 106, 3 (September 2015): 646–656 © 2015 The History of Science Society https://orcid.org/0000-0002-5010-345X en_US https://doi.org/10.1086/683529 Isis Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. application/pdf University of Chicago Press University of Chicago Press
spellingShingle Deringer, William P
For What It’s Worth: Historical Financial Bubbles and the Boundaries of Economic Rationality
title For What It’s Worth: Historical Financial Bubbles and the Boundaries of Economic Rationality
title_full For What It’s Worth: Historical Financial Bubbles and the Boundaries of Economic Rationality
title_fullStr For What It’s Worth: Historical Financial Bubbles and the Boundaries of Economic Rationality
title_full_unstemmed For What It’s Worth: Historical Financial Bubbles and the Boundaries of Economic Rationality
title_short For What It’s Worth: Historical Financial Bubbles and the Boundaries of Economic Rationality
title_sort for what it s worth historical financial bubbles and the boundaries of economic rationality
url http://hdl.handle.net/1721.1/116282
https://orcid.org/0000-0002-5010-345X
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