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Economics Language and Assumptions: How Theories Can Become Self-Fulfilling

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Author Info

  • Ferraro, Fabrizio

    (Stanford U)

  • Pfeffer, Jeffrey
  • Sutton, Robert I.
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    Abstract

    Social science theories can become self-fulfilling because they shape institutional designs and management practices as well as social norms and expectations about behavior, thereby creating the behavior they predict. Social theories also perpetuate themselves to the extent they promulgate language and assumptions that become widely used and accepted. Language and assumptions affect what people see and think about and what alternative organizational arrangements they consider implementing. We illustrate these ideas by considering how the language and assumptions of economics shape management practices. We argue that theories can "win" in the marketplace for ideas independently of their empirical validity to the extent that their assumptions and language become taken for granted, normatively valued, and therefore, create conditions that make the theories come "true."

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    Bibliographic Info

    Paper provided by Stanford University, Graduate School of Business in its series Research Papers with number 1849.

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    Date of creation: Jul 2003
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    Handle: RePEc:ecl:stabus:1849

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    1. Daniel Kahneman, 2003. "A Psychological Perspective on Economics," American Economic Review, American Economic Association, vol. 93(2), pages 162-168, May.
    2. Simonson, Itamar & Nye, Peter, 1992. "The effect of accountability on susceptibility to decision errors," Organizational Behavior and Human Decision Processes, Elsevier, vol. 51(3), pages 416-446, April.
    3. Noreen, Eric, 1988. "The economics of ethics: A new perspective on agency theory," Accounting, Organizations and Society, Elsevier, vol. 13(4), pages 359-369, June.
    4. John R. Carter & Michael D. Irons, 1991. "Are Economists Different, and If So, Why?," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 171-177, Spring.
    5. Jeffrey Pfeffer & Alison Davis-Blake, 1992. "Salary dispersion, location in the salary distribution, and turnover among college administrators," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 45(4), pages 753-763, July.
    6. Rik Pieters & Hans Baumgartner, 2002. "Who Talks to Whom? Intra- and Interdisciplinary Communication of Economics Journals," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 483-509, June.
    7. Frank, Bjorn & Schulze, Gunther G., 2000. "Does economics make citizens corrupt?," Journal of Economic Behavior & Organization, Elsevier, vol. 43(1), pages 101-113, September.
    8. McMillan, John, 2003. "Market Design: The Policy Uses of Theory," Research Papers 1781, Stanford University, Graduate School of Business.
    9. Baron, James N & Hannan, Michael T, 1994. "The Impact of Economics on Contemporary Sociology," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1111-46, September.
    10. Robert H. Frank & Thomas Gilovich & Dennis T. Regan, 1993. "Does Studying Economics Inhibit Cooperation?," Journal of Economic Perspectives, American Economic Association, vol. 7(2), pages 159-171, Spring.
    11. Bram Cadsby, Charles & Maynes, Elizabeth, 1998. "Choosing between a socially efficient and free-riding equilibrium: Nurses versus economics and business students," Journal of Economic Behavior & Organization, Elsevier, vol. 37(2), pages 183-192, October.
    12. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-54, May-June.
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    Cited by:
    1. Petersen, Verner C., 2005. "The otherworldly view of economics - and its consequences," Working Papers 2005-13, University of Aarhus, Aarhus School of Business, Department of Management.

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