Abstract
The purpose of this paper is to discuss the role of financial practice in the development of mathematics as applied in human judgement. The basis of the paper is in historical research from the 1990s that argues that the monetisation of western commerce, which abstracted value into quantified price, was synthesised with scholastic analysis resulting in a “mathematical mechanistic world picture” that led to the widespread use of mathematics in science from the seventeenth century. An aspect of this process was the quantification of chance that led to the development of mathematical probability, the branch of mathematics most relevant to judgement and the focus of this paper. Ideas from this historical research are related to the fundamental theorem of asset pricing (FTAP), the foundational theory of contemporary financial mathematics. The paper observes that vestiges of medieval scholastic attitudes to financial ethics can be discerned in the FTAP, offering a novel interpretation of the mathematical theorem. The paper then considers the Dutch book argument (DBA), the most popular justification for subjective probability. The paper’s main contribution is in describing the significance of financial practice in validating the DBA and the paper explains how the FTAP addresses some criticisms of how the DBA represents beliefs. The conclusions emphasise the distinction between pure and practical reasoning and that this should be mirrored in a distinction between the mathematics of physica and practica. This point is important as mathematics is becoming more widespread in modelling, and directing, social systems.
Original language  English 

Journal  Synthese 
Early online date  20 Apr 2020 
DOIs  
Publication status  Epub ahead of print  20 Apr 2020 
Keywords
 Dutch book argument
 Ethics
 Financial markets
 Mathematics
 Probability
ASJC Scopus subject areas
 Philosophy
 Social Sciences(all)
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Profiles

Timothy Johnson
 Research Centres and Themes, Centre for Finance & Investment  Associate Professor
 School of Mathematical & Computer Sciences  Associate Professor
 School of Mathematical & Computer Sciences, Actuarial Mathematics & Statistics  Associate Professor
 Research Centres and Themes, Energy Academy  Associate Professor
Person: Academic (Research & Teaching)