Ethics in Quantitative Finance: A Pragmatic Financial Market Theory

Description

This book presents an ethical theory for financial transactions that underpins the stability of modern economies. It combines elements from history, ethics, economics and mathematics to show how these combined can be used to develop a pragmatic theory of financial markets. Written in three sections; section one examines the co-evolution of finance and mathematics in an ethical context by focusing on three periods: pre-Socratic Greece, Western Europe in the thirteenth century and North-western Europe in the seventeenth century to demonstrate how the historical development of markets and finance were critical in the development of European ideas of science and democracy. Section two interprets the evidence presented in section one to provide examples of the norms reciprocity, sincerity and charity and introduce the pragmatic theory. Section three uses the pragmatic theory to interpret recent financial crises, address emergent phenomena and relate the theory to alternative contemporary theories of markets. Presenting a unique synthesis of mathematical and behavioural approaches to finance this book provides explicit ethical guidance that will be of interest to academics and practitioners alike. Front Matter ....Pages i-viii Introduction (Timothy Johnson)....Pages 1-7 The Genesis of Money and Its Impact (Timothy Johnson)....Pages 9-31 Finance and Ethics in Medieval Europe (Timothy Johnson)....Pages 33-54 Finance, Mathematics and the Foundations of Modernity (Timothy Johnson)....Pages 55-78 The Philosophical Basis of Modernity (Timothy Johnson)....Pages 79-101 The Financial Revolution of the Late Seventeenth Century (Timothy Johnson)....Pages 103-125 The Enlightenment and l’homme éclair (Timothy Johnson)....Pages 127-148 Practical Mathematics: The Development of Probability Theory (Timothy Johnson)....Pages 149-169 The Emergence of Homo economicus in the Nineteenth Century (Timothy Johnson)....Pages 171-194 The Ascendancy of Financial Economics (Timothy Johnson)....Pages 195-220 The Fundamental Theorem of Asset Pricing (Timothy Johnson)....Pages 221-244 Two Women and a Duck: A Pragmatic Theory of Markets (Timothy Johnson)....Pages 245-269 Some Implications of a Pragmatic Approach to Finance (Timothy Johnson)....Pages 271-293 Back Matter ....Pages 295-339