On the Hidden Thought Experiments of Economic Theory

Abstract

Most papers in theoretical economics contain thought experiments. They take the form of more informal bits of reasoning that precede the presentation of the formal, mathematical models these papers are known for. These thought experiments differ from the formal models in various ways. In particular, they do not invoke the same idealized assumptions about the rationality, knowledge and preferences of agents. The presence of thought experiments in papers that present formal models, and the fact that they differ from the formal models in this way are often ignored in debates on what, if anything, we can learn from formal models in theoretical economics. I show that paying due attention to thought experiments in theoretical economics has serious implications for this debate. Differences between thought experiments and formal models are especially problematic for Sugden's 'credible worlds' account.

Toward a Pluralist Account of the Imagination in Science

“…Salis and Frigg are right to stress similarities between thought experiments and models and they show that bringing the two together offers a fruitful way of thinking about the imagination in science. Both involve creating and engaging with idealized hypothetical scenarios, and because of this, some have argued that 'models are often experiments in thought' (Cartwright 2010, 19), or that models are cases of "extended cognition" (Thoma 2016). Further, it is often claimed that they share important similarities with experiment: they offer a description of an initial set up which is then manipulated for us to consider what would happen.…”

Imagination Rather Than Observation in Econometrics: Ragnar Frisch’s Hypothetical Experiments as Thought Experiments

“…Human behavior could conform to some stable regularity. But human agents do not necessarily behave in the particular way that the thought experiment dictates (see also Thoma 2016).…”

“…One such discipline is economics, where the methodological value of thought experiments is frequently justified by referring to the challenges of conducting actual experiments (e.g., Reiss 2012, 177). It has been argued that thought experiments serve several functions in economics, such as establishing causal facts, isolating tendencies, justifying social institutions and their persistence, establishing the credibility of mathematical models to draw inferences about economic reality, and questioning established scientific commitments (Reiss 2012, Maas 2014, Thoma 2016.…”

Recent Trends in Economic Methodology: A Literature Review

“…Yet, the discussion of models in economics has for the most part taken for granted that models are epistemically valuable in virtue of being 'representational' tools. Gru¨ne-Yanoff (2009 has challenged this generalised idea, and characterised so-called 'minimal models' as theoretical models which contribute in different valuable ways to how scientists learn about real-world phenomena (see also Claveau & Vergara Ferna´ndez, 2015;Thoma, 2016), even if such models do not hold any traditional representational relation to the world. Indeed, many theoretical models could be characterised as minimal models in the sense just described.…”