On The Clock: The Life and Death of a Market Convention

• In Event: 571 - Section on Economic Sociology Roundtables (one-hour)
  In Refereed Roundtable: Table 03. The Construction and History of Markets

Abstract

A market convention is customary, expected and self-enforcing – everyone conforms, and everyone expects everyone else to conform. In this paper, I look at the development of the convention among organizations in the National Football League to adhere to a chart that provides numerical valuation of draft pick positions in the market for picks during the NFL Draft. Organizations in the NFL have been found to adhere to this convention even in the face of evidence that the convention over- and undervalues the commodities that are traded. I examine the conditions of the organizational field that gave rise to the creation of the convention, the mechanism(s) by which the convention spread across the organizational field, and the reaction by NFL organizations as new methods and metrics threaten the valuations of the convention. I hypothesize why it is difficult to change market conventions in a competitive environment, and propose tests for the data. Observing the development and challenges to the market conventions in this unique market help us understand how we acquire market conventions – and why inefficient conventions persist.

Author

• Alan James Kluegel, University of California-Berkeley