A defence of absurd theories in economics
Nordberg, Morten and Ole Røgeberg
Theories that involve plainly false and even bizarre assumptions are argued to have an important role in bundling empirical facts in a way that allows these to be understood, handled and used as modules in the construction of mechanisms by economists with human cognitive limits. Absurd theories are 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 many economic theories, but also imposes hard limits on such theorising.
As-if theory, economic methodology, welfare economics
Project:Oppdragsgiver: Norges forskningsråd
Frisch prosjekt: 4101 - Economics of health
The Research Council of Norway