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Methods and finance: A view from outside

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The view from outside on finance maintains that we can make sense of, and profit from, stock markets’ behavior, or at least few crucial properties of it, by crunching numbers and looking for patterns and regularities in certain sets of data. The basic idea is that there are general properties and behavior of stock markets that can be detected and studied through mathematical lens, and they do not depend so much on contextual or domain-specific factors. In this sense the financial systems can be studied and approached at different scales, since it is virtually impossible to produce all the equations describing at a micro level all the objects of the system and their relations. The typical view of the externalist approach is the one provided, for instance, by the application of statistical physics. By focusing on collective behaviors, statistical physics neglects all the conceptual and mathematical intricacies deriving from a detailed account of the inner, individual, and at micro level functions of a system. This chapter examines how the view from outside deals with critical issues such as the mathematical modeling (Sect. 2), the construction and interpretation of data (Sect. 3), and the problem of prediction and performativity (Sect. 4).




Ippoliti, E. (2017). Methods and finance: A view from outside. In Studies in Applied Philosophy, Epistemology and Rational Ethics (Vol. 34, pp. 3–15). Springer International Publishing.

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