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The Naturalistic Turn In Economics: Implications For The Theory Of Finance

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Executive Summary

Economics is increasingly adopting the methodological standards and procedures of the natural sciences. The paper analyzes this 'Naturalistic turn' from the philosophical perspective on naturalism, and the author discusses the implications for the field of finance. The theory of finance is an interesting case in point for the methodological issues, as it manifests a paradigmatic tension between the pure theory of finance and Behavioral Finance. The author distinguishes between three kinds of naturalism: mark I, the reduction of behavior on psychoneural phenomena, mark II, the transfer of patterns of causal explanations from the natural sciences to the social sciences, mark III, the enrichment of the ontology from observer-independent to observer-relative facts.

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