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Transacting Without Pricing, Pricing Without Transacting

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  • Jacques-Olivier Charron

Abstract

The paper argues in favor of a radical disconnection between the exchange function and the valuation function of financial markets. It defends it from an investee's point of view, mainly on the grounds that valuing financial assets is a matter of judgment. Financial assets do not have any intrinsic utility; hence allowing markets to price them implies their price changes are determined by expectations. These latter rely on information that can be variously framed and interpreted, hence no a priori and stable valuation criteria can prevail. Consequently, investees bear the consequences of judgments that do not meet basic criteria of justice. Insulating the valuation function from the transaction function of financial markets through the creation of independent valuation institutions could be a way to tackle this problem.

Suggested Citation

  • Jacques-Olivier Charron, 2013. "Transacting Without Pricing, Pricing Without Transacting," World Economic Review, World Economics Association, vol. 2013(2), pages 1-48, February.
    • Handle: RePEc:wea:worler:v:2013:y:2013:i:2:p:48
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    References listed on IDEAS

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    1. Bhide, Amar, 2010. "A Call for Judgment: Sensible Finance for a Dynamic Economy," OUP Catalogue, Oxford University Press, number 9780199756070.
    2. Fabian Muniesa, 2000. "Un robot walrasien : cotation électronique et justesse de la découverte des prix," Post-Print halshs-00087467, HAL.
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