The two quantifications of the financial theory. A contribution to the critical history of financial modelling

Les deux quantifications de la théorie financière. Contribution à une histoire critique des modèles financiers

Christian Walter ()

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Abstract: I describe the changes of the financial theory over the long run by using the sociological notion of quantification and by coining a new terminology and framework: the first and second quantifications of this theory. I present an overview of the two quantifications by mirroring them with a stylized elementary market moving towards equilibrium. Then I illustrate the shift resulting from this transformation by describing the way the two quantifications impacted a well-known technique of the traditional finance, the calculation of the present value by discounting future cash flows.

Keywords: risk neutral probability; mathematical finance; financial modelling; history of financial thought; quantification; modélisation financière; histoire de la pensée financière; probabilité risque neutre; finance mathématique; convention (search for similar items in EconPapers)
Date: 2015-02
New Economics Papers: this item is included in nep-his and nep-hpe
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