Economic Models as Analogies

Itzhak Gilboa and Andrew Postlewaite

No 275778, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: People often wonder why economists analyze models whose as- sumptions are known to be false, while economists feel that they learn a great deal from such exercises. We suggest that part of the knowledge generated by academic economists is case-based rather than rule-based. That is, instead of oering general rules or theories that should be contrasted with data, economists often analyze models that are \theoretical cases", which help understand economic problems by drawing analogies between the model and the problem. According to this view, economic models, empirical data, experimental results and other sources of knowledge are all on equal footing, that is, they all provide cases to which a given problem can be compared. We of- fer complexity arguments that explain why case-based reasoning may sometimes be the method of choice and why economists prefer simple cases.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 42
Date: 2013-01
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Citations: View citations in EconPapers (1)

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Journal Article: Economic models as analogies (2015)
Journal Article: Economic Models as Analogies (2014)
Working Paper: Economic Models as Analogies (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:isfiwp:275778

DOI: 10.22004/ag.econ.275778

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