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Economics: Between Prediction and Criticism

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Abstract

We suggest that one way in which economic analysis is useful is by offering a critique of reasoning. According to this view, economic theory may be useful not only by providing predictions, but also by pointing out weaknesses of arguments. It is argued that, when a theory requires a non-trivial act of interpretation, its roles in producing predictions and offering critiques vary in a substantial way. We offer a formal model in which these different roles can be captured.

Suggested Citation

  • Itzhak Gilboa & Andrew Postlewaite & Larry Samuelson & David Schmeidler, 2014. "Economics: Between Prediction and Criticism," Cowles Foundation Discussion Papers 1958, Cowles Foundation for Research in Economics, Yale University, revised Feb 2016.
    • Handle: RePEc:cwl:cwldpp:1958
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    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d19/d1958.pdf
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    References listed on IDEAS

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    1. John B. Davis & D. W. Hands & Uskali Mäki (ed.), 1998. "The Handbook of Economic Methodology," Books, Edward Elgar Publishing, number 741.
    2. Uskali Maki, 2005. "Models are experiments, experiments are models," Journal of Economic Methodology, Taylor & Francis Journals, vol. 12(2), pages 303-315.
    3. Aragones, Enriqueta & Gilboa, Itzhak & Postlewaite, Andrew & Schmeidler, David, 2014. "Rhetoric and analogies," Research in Economics, Elsevier, vol. 68(1), pages 1-10.
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    7. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    8. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
    9. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521425230, December.
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    11. Till Grune-Yanoff & Paul Schweinzer, 2008. "The roles of stories in applying game theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 15(2), pages 131-146.
    12. Gilboa,Itzhak & Schmeidler,David, 2001. "A Theory of Case-Based Decisions," Cambridge Books, Cambridge University Press, number 9780521802345, November.
    13. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521415019, December.
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    Cited by:

    1. Thomas J. Sargent, 2015. "Robert E. Lucas Jr.'s Collected Papers on Monetary Theory," Journal of Economic Literature, American Economic Association, vol. 53(1), pages 43-64, March.
    2. Itzhak Gilboa & Andrew Postlewaite & Larry Samuelson & David Schmeidler, 2019. "What are axiomatizations good for?," Theory and Decision, Springer, vol. 86(3), pages 339-359, May.

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    More about this item

    Keywords

    Methodology; Models; Economic modeling;
    All these keywords.

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology

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