For the 96th session of the Philosophical Foundations of Law and Finance I am taking the stage to share with you some thoughts that are related to my research on the intermediated holding system. Don't be put off by the term since I am very keen to spare you the technicalities of it and of an entire system that lies underneath. Instead I am planning to discuss with you a paper from Robert K. Merton, one of the most famous sociologists of the 20th century, entitled the Unanticipated Consequences of the Purposeful Social Actions, a subject with which Merton become obsessed for the years to follow. As one of most impressive bits, Merton wrote this very simple but at the same time clear and challenging paper (influenced by Frank H. Knight) in 1936, still fresh from his graduation. After 76 years the Mertonian factors that lead to the unanticipated consequences remain unchallenged while inexplicably his impact on the legal theories appears to be weak.
During the session I will focus on the five categories of factors that according to Merton lead to the unanticipated consequences of the purposeful social actions i.e. (i) the lack of knowledge (ignorance), (ii) the error, (iii) the imperious immediacy of interest, (iv) the basic values, and (v) the self-fulfilling and self-defeating prophecy. These categories appear to encapsulate many later findings from different sciences, but from the economics and its branch of the behavioural economics. I would even speculate that the above categories can be translated into asymmetries such as (i) the information asymmetry (developed by Akerlof and Spitzer to name a few), (ii) the perception asymmetry (e.g. due to emotional or cognitive biases, mostly developed by the behavioural economics and psychology), (iii) the interest asymmetry (e.g. the self-serving bias of bureaucrats, the capture theory, mostly developed by the neoclassical economists), (iv) the belief asymmetry (e.g. self-destructive blind belief in ideologies or fundamentals without recognition of their limits) and (v) the persuasion asymmetry (e.g. herd behaviour).
I would be very interested to hear your thoughts on the above and would be very pleased if we can turn this session into a challenging but also entertaining discussion.