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

Research Paper Series Paper No. 1849

42 Pages Posted: 30 Mar 2004 Last revised: 12 Jan 2012

See all articles by Fabrizio Ferraro

Fabrizio Ferraro

IESE Business School

Jeffrey Pfeffer

Stanford Graduate School of Business

Robert I. Sutton

Stanford Graduate School of Business

Date Written: July 1, 2003

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."

Suggested Citation

Ferraro, Fabrizio and Pfeffer, Jeffrey and Sutton, Robert I., Economics Language and Assumptions: How Theories Can Become Self-Fulfilling (July 1, 2003). Research Paper Series Paper No. 1849. Available at SSRN: https://ssrn.com/abstract=521883 or http://dx.doi.org/10.2139/ssrn.521883

Fabrizio Ferraro (Contact Author)

IESE Business School ( email )

AV.da Pearson 21
Barcelona, 08034
Spain
932534200 (Phone)

HOME PAGE: http://https://blog.iese.edu/ferraro/

Jeffrey Pfeffer

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Robert I. Sutton

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

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