Econometrica, Vol. 74, No. 4 (July, 2006), 865–883
HERE
ABSTRACT-What on earth are economic theorists like me trying to accomplish? This 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 we have the right to offer advice or tomake statements
that are intended to influence the real world?
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