Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/174322 
Year of Publication: 
2017
Series/Report no.: 
MAGKS Joint Discussion Paper Series in Economics No. 26-2017
Publisher: 
Philipps-University Marburg, School of Business and Economics, Marburg
Abstract: 
If we take it that, at least in the social sciences, "realistic" implies "finite", then countless economic models involving infinitary assumptions must obviously be classified as unrealistic - for example, models with infinitely divisible goods, a continuum of traders, consumers optimizing over an infinite time horizon, or players optimizing over an infinite number of interactions. We argue that unrealistic models involving infinities can, in principle, supply explanations in economics. We develop a concept of approximate explanation based on the "method of decreasing abstraction", that is, the practice of approximating complex situations through a sequence of increasingly realistic models. Our account of approximate explanation renders the testing view of economic science compatible with scientific realism. However, compatibility does not extend to the folk theorems for infinitely repeated games, which are used widely in applied economics (e.g., in industrial economics) and beyond (e.g., spontaneous emergence of social order). Explanations based on these theorems are rejected by our criterion.
Subjects: 
Approximate explanation
Folk theorems of game theory
Infinite idealizations
Method of decreasing abstraction
Methodology of economics
Unrealistic assumptions
JEL: 
B40
B41
C73
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.