Dilemmas of an Economic Theorist

Abstract

The paper discusses four dilemmas encountered by an economic theorist. The dilemma of absurd conclusions: should we abandon a model if it produces absurd conclusions or should we regard a model as a very limited set of assumptions that will inevitably fail in some contexts? The dilemma of responding to evidence: should our models be judged according to experimental results? The dilemma of modelless regularities: should models provide the hypothesis for testing or are they simply exercises in logic that have no use in identifying regularities? The dilemma of relevance: do economists have the right to offer advice or to make statements that are intended to influence the real world?

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