From Cognition to Convention: Assessing the Causal Effect of Taxonomic Shocks on Candidate Evaluation

• In Event: 355 - Section on Economic Sociology Roundtable Session (one-hour).
  In Refereed Roundtable: Table 16. Cognition and the Economy

Abstract

I advance a taxonomic perspective of market categorization. Whereas recent categories scholarship has adopted a constructionist view, in which categories emerge gradually from collective sensemaking activities, I argue that the development of categorization systems is punctuated by ‘taxonomic shocks’ in the form of preliminary labels and schemata. Taxonomies are deliberate classification activities that (a) are authored by a minority of market participants (taxonomists) often aligned with a powerful intermediary, (b) introduce multiple category labels simultaneously, and (c)elevate some candidate features as more relevant for classification than others. Prospective borrowers on the peer-to-peer lending website Prosper.com experienced an exogenous change in the market’s formal categorization structure: a taxonomy of loan purposes implemented by market founders. Through matched-sample analysis, I recover causal effects of a ‘taxonomic shock’ on borrower evaluation in the market.

Author

• Brian Philip Reschke, University of California-Berkeley