A nuanced perspective on episteme and techne in finance

Millo, Y and Schinckus, C 2016, 'A nuanced perspective on episteme and techne in finance', International Review of Financial Analysis, vol. 46, pp. 124-130.


Document type: Journal Article
Collection: Journal Articles

Title A nuanced perspective on episteme and techne in finance
Author(s) Millo, Y
Schinckus, C
Year 2016
Journal name International Review of Financial Analysis
Volume number 46
Start page 124
End page 130
Total pages 7
Publisher Elsevier
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.
Subject Finance
Keyword(s) Chicago board options exchange
Episteme
Market makers
Options
Techne
DOI - identifier 10.1016/j.irfa.2016.04.001
Copyright notice © 2016 Elsevier Inc.
ISSN 1057-5219
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