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Economics language and assumptions: How theories can become self-fulfilling


  • Ferraro, Fabrizio

    () (IESE Business School)

  • Pfeffer, Jeffrey

    (Stanford University)

  • Sutton, Robert I.

    (Stanford University)


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 that 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."

Suggested Citation

  • Ferraro, Fabrizio & Pfeffer, Jeffrey & Sutton, Robert I., 2003. "Economics language and assumptions: How theories can become self-fulfilling," IESE Research Papers D/530, IESE Business School.
  • Handle: RePEc:ebg:iesewp:d-0530

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    References listed on IDEAS

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    Cited by:

    1. Stofferahn, Curtis W., 2010. "South Dakota Soybean Processors: The Discourse of Conversion from Cooperative to Limited Liability Corporation," Journal of Cooperatives, NCERA-210, vol. 24.

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    language; self-fulfilling prophecy; social science; economic theories;

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