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A defence of absurd theories in economics

  • Ole R�geberg
  • Morten Nordberg

Theories that involve plainly false and even bizarre assumptions could have an important role in bundling empirical facts and allowing these to be understood, handled and used as modules in the construction of mechanisms by economists with human cognitive limits. Absurd theories would be subcomponents used in a valid explanatory strategy as long as the mechanisms only derive the implications of the facts summarised. This provides a defence and explanation of parts of current practise, but also imposes hard limits on such theorising.

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Article provided by Taylor & Francis Journals in its journal Journal of Economic Methodology.

Volume (Year): 12 (2005)
Issue (Month): 4 ()
Pages: 543-562

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Handle: RePEc:taf:jecmet:v:12:y:2005:i:4:p:543-562
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  1. McFadden, Daniel, 1999. "Rationality for Economists?," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 73-105, December.
  2. Roger Backhouse, 1997. "Book Reviews," Journal of Economic Methodology, Taylor & Francis Journals, vol. 4(2), pages 315-320.
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  4. Sen, Amartya, 1993. "Internal Consistency of Choice," Econometrica, Econometric Society, vol. 61(3), pages 495-521, May.
  5. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
  6. Schoemaker, Paul J H, 1982. "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 529-63, June.
  7. Simon, Herbert A, 1979. "Rational Decision Making in Business Organizations," American Economic Review, American Economic Association, vol. 69(4), pages 493-513, September.
  8. Hirsch, Abraham & de Marchi, Neil, 1984. "Methodology: A Comment on Frazer and Boland, I [An Essay on the Foundations of Friedman's Methodology]," American Economic Review, American Economic Association, vol. 74(4), pages 782-88, September.
  9. Dawes, Robyn M., 1999. "A message from psychologists to economists: mere predictability doesn't matter like it should (without a good story appended to it)," Journal of Economic Behavior & Organization, Elsevier, vol. 39(1), pages 29-40, May.
  10. Hausman, Daniel M, 1989. "Economic Methodology in a Nutshell," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 115-27, Spring.
  11. Boland, Lawrence A, 1981. "On the Futility of Criticizing the Neoclassical Maximization Hypothesis," American Economic Review, American Economic Association, vol. 71(5), pages 1031-36, December.
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  14. Stanley, T D, 1985. "Positive Economics and Its Instrumental Defence," Economica, London School of Economics and Political Science, vol. 52(27), pages 305-19, August.
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  16. Machina, Mark J, 1999. "A Challenge to the "Econoclasts": A Commentary on "Rationality for Economists?"," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 107-08, December.
  17. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
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