Methods and Finance. A View From Inside
Emiliano Ippoliti
Abstract The view from inside maintains that not only to study and understand, but
also to profit from financial markets, it is necessary to get as much knowledge as
possible about their internal ‘structure’ and machinery. This view maintains that in order
to solve the problems posed by finance, or at least a large part of them, we need first of all
a qualitative analysis. Rules, laws, institutions, regulators, the behavior and the psy-
chology of traders and investors are the key elements to the understanding of finance,
and stock markets in particular. Accordingly, data and their mathematical analysis are
not the crucial elements, since data are the output of a certain underlying structure of
markets and their actors. The underlying structure is the ultimate object of the inquiry.
This chapter examines how the view from inside raises, and deals with, critical issues
such as markets failure, information disclosure, and regulation (Sect. 2), the notion of
data (Sect. 3), performativity (Sect. 4), and the study of micro-structures (Sect. 5).
1 The Inside View: An Overview
The view from inside and the view from outside make different assumptions about
critical ontological and methodological issues on finance, in particular the role of
mathematical modeling, the methods to be employed, and the nature and set of vari-
ables to employ in order to achieve a better understanding of the financial systems.
The inside view argues that not only to study and understand, but also to profit
from markets, it is necessary to get as much knowledge as possible about their
internal ‘structure’ and machinery. This view maintains that in order to solve the
problems posed by finance, or at least a large part of them, we need first of all a
qualitative analysis. Rules, laws, institutions, regulators, the behavior and the
psychology of traders and investors are the key elements to the understanding of
finance, and stock markets in particular. In its strong version, this view maintains
that finance is a black box—plenty of dark zones and opacities. Accordingly, data
E. Ippoliti (
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Department of Philosophy, Sapienza University of Rome, Rome, Italy
e-mail: emi.ippolit@gmail.com
© Springer International Publishing AG 2017
E. Ippoliti and P. Chen (eds.), Methods and Finance,
Studies in Applied Philosophy, Epistemology and Rational Ethics 34,
DOI 10.1007/978-3-319-49872-0_7
121
emi.ippoliti@gmail.com