HERO On line Working Paper Series
Defence of Absurd Theories in Economics
() and Ole Jørgen Røgeberg
Abstract: 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.
Keywords: As-if theory; Economic methodology; welfare economics; (follow links to similar papers)
JEL-Codes: B41; D00; (follow links to similar papers)
25 pages, June 22, 2009
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