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Overcoming Bias Commenter's avatar

Sorry, to be clear, I'm referring to microeconomic models like Arrow-Debreu equilibrium or game theory; e.g. the sort of stuff that appears in http://econtheory.org/ . Looks like the other commenters have macro models in mind.

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Overcoming Bias Commenter's avatar

Making big complex models sounds like a great idea if you can fit them to real data (or attempt to do so). But theoretical economics is so theoretical, the models are related to reality only though analogies. Thus the only value you can get out of them is to explore their mathematical properties and hope those properties are analogous to properties in the real world. Since it's easier to explore mathematical properties of simpler models, simple models are better for pure-theoretical modeling.

Now, of course, that doesn't address the value of the entire enterprise of theoretical modeling... I still like it, but I admit that's more due to aesthetics than a conviction it's good for the advancement of scientific understanding. (I confess to having written both an honors and master's thesis that were purely theoretical...)

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