Year:    1988

Author:    Burchardt, Michael

Credit and Capital Markets – Kredit und Kapital, Vol. 21 (1988), Iss. 4 : pp. 532–555

Abstract

From homo oeconomicus to homo portfolicus

On the one hand, this paper attempts to trace the development the theory of portfolio selection has taken over time from its beginnings in the 1950s and mainly in the course of the monetarist redefinition of the theory of money. In that period, the theory of portfolio selection has become one of the mainstays of the neoclassic theory. The paper demonstrates in detail how the homo-oeconomicus rationality traditionally ascribed to market participants has been made more specific and refined by the theory of portfolio selection. The optimization is postulates — offset of marginal rates of return within a widely defined portfolio structure — has resulted in a uniform explanatory approach that is integrating and paradigmatic for neoclassic hermeneutics.

On the other hand, this paper discusses the implications and consequences which this metamorphosis from homo oeconomicus to homo portfolicus with highly differenciated modes of behaviour invariably means from a methodical and a cognitive point of view. To what extent – if at all – would it be fair to speak about progress in a cognitive respect? Do the explanatory attemps and, respectively, hypotheses of the theory of portfolio selection meet Popper’s scientific approach criterion more strictly in that they are more easily verifiable in empirical terms, even though they may also be rather closer to failure?

The paper reaches the conclusion that the theory of portfolio selection may well help prepare more accurate space and time-related hypotheses than is possible hitherto with the traditional procedures. To that extent it would be fair to accord them a greater empirical value in Popper’s sense. The necessary econometric analyses aiming for the verification of corresponding hypotheses are, however, still missing for the most part. So is thus their latent confirmation.