Thursday, 7 June 2018

Conventions and the value of financial assets

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John Maynard Keynes
Source: Wikimedia Commons
For mainstream economists, the prices of financial assets like shares and derivatives are determined by objective assessments of the future revenue streams that the holder of the asset is entitled to. But it is far more plausible to see them as the outcome of interactions between a variety of different financial valuation conventions, or lay theories of value as I called valuation conventions in my earlier post. This post reflects on the contributions of John Maynard Keynes, André Orléan and Jens Beckert to explaining how valuation conventions influence financial asset values.