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A Hollow Cultural Core? An Inquiry into New Institutional Approaches to Incentive Based Regulation

Published online by Cambridge University Press:  30 April 2015

Rachel Harvey
Rachel Harvey*
Affiliation:
Columbia University, New York [rmharvey@uchicago.edu].
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Abstract

The trans-disciplinary New Institutional framework identifies the importance of incentive structures in preventing opportunism in market making. In recent decades this theoretical tradition has increasingly shifted its attention from formal institutions to identify the significance of cultural processes in countering uncertainty, bounded rationality, and information asymmetries. More specifically the New Institutional perspective tends to focus on the formal mechanisms producing and reproducing culture, as opposed to an examination of specific cultural content. This attention to formal mechanisms means that value-rational action and commitments in market making receive insufficient attention. In order to examine the problems entailed in this trend, the case study of a financial market in which market making was constituted by the values of loyalty, duty, and honor of traders is used.

Résumé

L’approche transdisciplinaire néo-institutionnelle souligne l’importance des structures d’incitation pour prévenir l’opportunisme sur le cours ordinaire des marchés. Cette tradition théorique a progressivement déplacé son attention des institutions formelles vers les processus culturels destinés à contrebalancer l’incertitude, la rationalité limitée et les asymétries informationnelles. Plus particulièrement, la perspective néo-institutionnelle tend à privilégier l’étude des mécanismes formels produisant ou reproduisant la culture, par opposition à l’étude même du contenu culturel spécifique. Cette attention accordée aux mécanismes formels laisse toutefois dans l’ombre des dimensions telles que la rationalité en valeur de l’action ou la variété des formes d’engagement liées au marché. Pour examiner les problèmes associés à cette approche, l’article présente l’étude de cas d’un marché financier dans lequel le cours ordinaire du marché apparaît comme lié à des valeurs telles que la loyauté, le devoir ou le sens de l’honneur des traders.

Zusammenfassung

Der transdisziplinäre, neoinstitutionelle Ansatz unterstreicht die Bedeutung der inzitativen Strukturen, die dem Opportunismus des gewöhnlichen Marktablaufs vorbeugen helfen. Diese theoretische Tradition hat im Laufe der Zeit die Aufmerksamkeit der formellen Institutionen in Richtung kulturelle Prozesse verschoben, Unsicherheit, begrenzte Rationalität und informationelle Asymmetrien ausgleichend. Insbesondere die neo-institutionelle Perspektive bevorzugt eine Untersuchung der formellen Mechanismen, die Kultur produzieren und reproduzieren, gegenüber einer Studie mit einem spezifischen kulturellen Inhalt. Die den formellen Mechanismen zugesprochene Bedeutung stellt jedoch Dimensionen wie Rationalität des Aktienwerts oder Vielfalt marktabhängiger Engagementsvariablen in den Schatten. Laut der hier vorgestellten Finanzmarktstudie scheint der alltägliche Marktverlauf von Werten wie Loyalität, Pflicht oder Ehre der Trader bestimmt zu sein.

Keywords

CultureInstitutionsMarketsCultureInstitutionsMarchésKulturInstitutionerMärkte
Type
Economic Culture in the Public Sphere
Information
European Journal of Sociology / Archives Européennes de Sociologie , Volume 56 , Issue 1: Economic Culture in the Public Sphere , April 2015 , pp. 39 - 62
Copyright
Copyright © A.E.S. 2015 

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