Critics of Rawls's A Theory of Justice frequently envision his original position as containing a human consciousness. Thus, the re- strictions Rawls introduces for this ‘individual’—the lack of particular circumstantial and personal information—is considered a potential problem. The very ways in which Rawls circumscribes the knowledge available in this position is thought to compromise the personhood of the individual there, and hence as well the conclusions reached (that is, Rawls’s two principles). This paper will argue that, on the contrary, the (...) lack of full personhood is a critical part of Rawls’s modeling strategy, and that Rawls borrowed this particular sense of modeling from eco- nomics. It is well known that Rawls worked to verse himself in economic theory, and it is difficult to overlook its use in Theory. It will be argued that it is through parallels with economic reasoning that Rawls’s original position model can be most fruitfully understood. (shrink)

Consider a firm as an organization that needs to efficiently coordinate several specialized departments in an uncertain environment. Decision making involves collective planning sessions and decentralized operational processes. In this setting this paper explores the role of economic modeling through an experimental game. Results support the idea that economic modeling favors higher performance. Economic modeling facilitates the emergence of common knowledge and the decomposition of a group decision problem into individual decision problems that are (...) meaningfully interrelated. (shrink)

This paper defends the viability of de-idealization strategies in economic modeling against recent criticism. De-idealization occurs when an idealized assumption of a theoretical model is replaced with a more realistic one. Recently, some scholars have raised objections against the possibility or fruitfulness of de-idealizing economic models, suggesting that economists do not employ this kind of strategy. We present a detailed case study from the theory of industrial organization, discussing three different models, two of which can be construed (...) as de-idealized versions of the first. We conclude that recent pessimism about de-idealization in economics is largely unfounded, and that de-idealization strategies are not only possible but also widely employed in economics. (shrink)

This paper defends the viability of de-idealization strategies in economic modeling against recent criticism. De-idealization occurs when an idealized assumption of a theoretical model is replaced with a more realistic one. Recently, some scholars have raised objections against the possibility or fruitfulness of de-idealizing economic models, suggesting that economists do not employ this kind of strategy. We present a detailed case study from the theory of industrial organization, discussing three different models, two of which can be construed (...) as de-idealized versions of the first (the so-called Bertrand model of oligopoly). We conclude that recent pessimism about de-idealization in economics is largely unfounded, and that de-idealization strategies are not only possible but also widely employed in economics. (shrink)

Templates travel because they offer a tractable format that can be used for model-building in a variety of domains. It is often because of this quality that a particular template is chosen. But one cannot assume that there are always templates ready to model a new phenomenon, and moreover, templates have also been designed at some point. A critical aspect of this designing process is the choice of the mathematical objects with which one hopes to capture this phenomenon. This means (...) that one has to assess which of the properties of different kinds of mathematical objects and which combinations of them are most appropriate. The selection of these objects is based on whether their properties enable the model to perform its function. This selection of mathematical objects is similar to the selection of materials in mechanical design. (shrink)

Templates travel because they offer a tractable format that can be used for model-building in a variety of domains. It is often because of this quality that a particular template is chosen. But one cannot assume that there are always templates ready to model a new phenomenon, and moreover, templates have also been designed at some point. A critical aspect of this designing process is the choice of the mathematical objects with which one hopes to capture this phenomenon. This means (...) that one has to assess which of the properties of different kinds of mathematical objects and which combinations of them are most appropriate. The selection of these objects is based on whether their properties enable the model to perform its function. This selection of mathematical objects is similar to the selection of materials in mechanical design. (shrink)

This ambitious book looks 'behind the model' to reveal how economists use formal models to generate insights into the economy. Drawing on recent work in the philosophy of science and economic methodology, the book presents a novel framework for understanding the logic of economic modeling. It also reveals the ways in which economic models can mislead rather than illuminate. Importantly, the book goes beyond purely negative critique, proposing a concrete program of methodological reform to better equip (...) economists to detect potential mismatches between their models and the targets of their inquiry. Ranging across economics, philosophy, and social science methods, and drawing on a variety of examples, including the recent financial crisis, Behind the Model will be of interest to anyone who has wondered how economics works - and why it sometimes fails so spectacularly. (shrink)

In this paper we explore the hypothesis that constrained uses of imagination are crucial to economic modeling. We propose a theoretical framework to develop this thesis through a number of specific hypotheses that we test and refine through six new, representative case studies. Our ultimate goal is to develop a philosophical account that is practice oriented and informed by empirical evidence. To do this, we deploy an abductive reasoning strategy. We start from a robust set of hypotheses and (...) leave space for the generation of further hypotheses and theoretical claims based on the qualitative analysis of new empirical data. (shrink)

I explore heterogeneous constructionism, my term for the perspective that science in the making is a process of agents building by combining a diversity of components. Issues addressed include causality and explanation; transcending both realism and relativism; scientists as acting, intervening, and imaginative agents; explanations that span many levels of social practice; counterfactuals in the analysis of causal claims; and practical reflexivity. An analogy from research on the social origins of depression and a sketch from my own experience in socioeconomic (...) modeling are used to motivate and render more concrete the form of heterogeneous constructionism I am advocating. (shrink)

Factory floors throughout the global economy are rapidly transforming themselves into potentially fertile laboratories for research in the cognitive sciences. The information revolution has challenged our understanding of perception and cognition. Innovations in information technologies have also provided us with new methods and environments for the study of cognition. On the business and economic front, information technology is supporting the development of new corporate information systems-Enterprise Systems-that will revolutionize the decision-making, reporting and reward environments in corporations. These systems are (...) pervasive and transforming. At all levels, employees will be presented with potentially unlimited amounts of accurate, real-time information and will be expected to use that information effectively. The possibilities for research, especially for modeling the learning and decision-making processes, are unparalleled. Research conducted in these environments offers extraordinary opportunities to address research questions formerly requiring limited synthetic environmental situations. Data collected in firms as they deploy enterprise information systems can be more extensive and accurate and more easily quantified than data from traditional synthetic experiments. Research programs in these settings can also address more complex problems of human interaction and collaborativity. This article describes the aspects of enterprise systems that will be of greates interest to cognitive scientists. It also outlines the nature of potential collaboration between economists and cognitive scientists and offers a list of outstanding questions for systems design and development. (shrink)

The ArgumentThe Netherlands has been a pioneering country in the development of macroeconometric modeling and its use in economic policy. The paper shows that the model was used to overcome the fragmented culture of Dutch pillarization. It proves that the specific use of modeling in the policy process is at least partly shaped by a nation's social structure. The case study relates to the outcome of a controversy within the social democratic pillar in the Netherlands in the (...) period 1930–50 as to how to plan the economic system in the context of the social developments leading up to the crisis, World War II, and the postwar recovery. (shrink)

“Hard obscurantism” is a species of the genus scholarly obscurantism. A rough intensional definition of hard obscurantism is that models and procedures become ends in themselves, dissociated from their explanatory functions. In the present article, I exemplify and criticize hard obscurantism by examining the writings of eminent economists and political scientists.

Real-world economies are open-ended dynamic systems consisting of heterogeneous interacting participants. Human participants are decision-makers who strategically take into account the past actions and potential future actions of other participants. All participants are forced to be locally constructive, meaning their actions at any given time must be based on their local states; and participant actions at any given time affect future local states. Taken together, these essential properties imply real-world economies are locally-constructive sequential games. This paper discusses a modeling (...) approach, Agent-based Computational Economics, that permits researchers to study economic systems from this point of view. ACE modeling principles and objectives are first concisely presented and explained. The remainder of the paper then highlights challenging issues and edgier explorations that ACE researchers are currently pursuing. (shrink)

Biologists and economists use models to study complex systems. This similarity between these disciplines has led to an interesting development: the borrowing of various components of model-based theorizing between the two domains. A major recent example of this strategy is economists’ utilization of the resources of evolutionary biology in order to construct models of economic systems. This general strategy has come to be called evolutionary economics and has been a source of much debate among economists. Although philosophers have developed (...) literatures on the nature of models and modeling, the unique issues surrounding this kind of interdisciplinary model building have yet to be independently investigated. In this paper, we utilize evolutionary economics as a case study in the investigation of more general issues concerning interdisciplinary modeling. We begin by critiquing the distinctions currently used within the evolutionary economics literature and propose an alternative carving of the conceptual terrain. We then argue that the three types of evolutionary economics we distinguish capture distinctions that will be important whenever resources of model-based theorizing are borrowed across distinct scientific domains. Our analysis of these model-building strategies identifies several of the unique methodological and philosophical issues that confront interdisciplinary modeling. (shrink)

Research on economization processes is increasingly taking seriously the social and material processes through which various policy domains are transformed into economic problems and solutions. This article engages “Value Added Modeling” (VAM) in teacher evaluation systems as a case study in economization. VAM is a statistical technology for evaluating the effectiveness of schoolteachers using student test scores, which wrests authority for the determination of quality teaching away from education professionals and toward quantitative economic modelers. Mobilizing field theory, (...) we trace a half century of changing relationships among economists, other academics, and various policy audiences (from media to philanthropists to state and federal government) in struggles to define education policy concerning teacher quality. We show that economization is a set of overlapping, sometimes contradictory processes that can take different forms: in this case, the spread of an “economic style of reasoning” or the establishment of “economic policy devices.” The case of VAM shows stages of economization in which processes first proceeded independently of one another, then interacted in contradictory ways, and finally, mutually reinforced one another. What primarily drove these interactions was the struggle for scientific capital within the economics discipline and the changing place of education policy and VAM within it. Ultimately, VAM’s original role as a policy device for evaluating and selecting individual teachers has foundered even as it has become an important tool for economists to accrue scientific capital and expand their style of reasoning to broader audiences. (shrink)

Much of biological and economic theorizing takes place by modeling, the indirect study of real-world phenomena by the construction and examination of models. Books and articles about biological and economic theory are often books and articles about models, many of which are highly idealized and chosen for their explanatory power and analytical convenience rather than for their fit with known data sets. Philosophers of science have recognized these facts and have developed literatures about the nature of models, (...) modeling, idealization, as well as testing of models and explanation by models, for both biology and economics. The impetus for this special issue came from our recognition that there is remarkably little overlap between the “modeling in biology” and “modeling in economics” literatures, despite many of the same themes appearing in these literatures. (shrink)

This research aims at establishing the impact of information and communication technologies (ICT) on e-commerce development of industrial enterprises by means of economic and mathematical modelling. The goal was achieved using the following methods: theoretical generalization, analysis and synthesis (to critically analyse the scientific approaches of scientists regarding the expediency of using mathematical models in the context of enterprises’ e-commerce development), target, comparison and grouping (to reveal innovative methodological approach to assessing ICT impact on e-commerce development of industrial enterprises), (...) tabular, analytical and integral method (for summarizing the analysis results of enterprises readiness to implement ICT, ICT use in the activities of industrial enterprises of Ukraine and the analysis of e-commerce development), mathematical modelling (to build a regression model determining impact of changes in ICT use on the market share occupied by industrial enterprises), generalization (to determine promising directions of e-commerce developing of industrial enterprises). The implementation of a comprehensive approach to understanding the importance of ICT influence on e-commerce development of industrial enterprises will ensure acceleration of the digitalization of business processes, will contribute to the speed increase of enterprises response to customer requests, and increase the market share occupied by enterprises. A new vision of directions for developing e-commerce of industrial enterprises is suggested, which are determined by the need for enterprise rebranding, the development of e-commerce tools and technologies, the importance of outsourcing service automation and promotion of subscription trade. ICT is considered as integration factor that determines prospects for e-commerce development of industrial enterprises and contributes to increasing efficiency of online business management. Research results demonstrate that the use of economic and mathematical modelling is an important tool for assessing ICT impact, and its absence can negatively affect the accuracy and validity of online business management. (shrink)

Several authors have recently argued that the excessive focus on equilibrium models in mainstream economic analysis prevents economists from providing accurate representations of the complex and dynamic nature of real economic systems. In response, this paper argues the following. Many economic systems are the products of deliberate and centralized human design. People can and do build and support structures, such as social institutions, aiming to enhance the predictability of economic systems, and thus to move them toward (...) being equilibrium systems. This provides a reason to think that many economic systems can be represented by equilibrium models. (shrink)

In this paper, I draw a parallel between the stability of physical systems and that of economic ones, such as the US financial system. I argue that the use of equilibrium assumptions is central to the analysis of dynamic behavior for both kinds of systems, and that we ought to interpret such idealizing strategies as footholds for causal exploration and explanation. Our considerations suggest multi-scale modeling as a natural home for such reasoning strategies, which can provide a backdrop (...) for the assessment and prevention of financial crises. Equilibrium assumptions are critical elements of the epistemic scaffolding that make up multi-scale models, which we should understand as a means of constructing explanations of dynamic behavior. (shrink)

The purpose of the study is to conduct a simulation of the impact of tourist flows and tourist infrastructure on the economic security of the state. In this paper, it is proposed to conduct a simulation of the impact of tourist flows and tourist infrastructure on the economic security of the state. The scientific novelty lies in the justification of the development of tourism from the point of view of a more complete use of the regional potential of (...) the country. As a result, the main aspects of the influence of the level of tourist flows on the economic potential of the territory are identified, the use of which allows you to diversify the risks and threats of economic destabilization. The authors noted the need for the development of tourism infrastructure to maintain the economic security of the regions. (shrink)

A sequel to Global Trade Analysis: Modeling and Applications, this new volume presents the technical aspects of the Global Trade Analysis Program's global dynamic framework and its applications within important global policy issues. The book covers a diverse set of topics including trade reform, growth, investment, technology, demographic change and the environment. Environmental issues are particularly well-suited for analysis with GDyn, and this volume covers its uses with climate change, resource use and technological progress in agriculture. Other applications presented (...) in the book focus on integration issues such as rules governing foreign investment, e-commerce regulations, trade in services, harmonization of technical standards, sanitary and photo-sanitary regulations, streamlining of customs procedures, and demographic change and migration. (shrink)

We model differences among agents in their ability to recognize temporal patterns of prices. Using the concept of DeBruijn sequences in two dynamic models of markets, we demonstrate the existence of equilibria in which prices fluctuate in a pattern that is independent of the fundamentals and that can be recognized only by the more competent agents. (JEL: C7, D4.

The scientific methodology underlying model-building is critically investigated. The modeling views of Popper and Samuelson and their prototypes are critically examined in the light of the theme of the moral law of unity of knowledge and unity of the world-system configured by the meta-epistemology of organic unity of knowledge. Upon such critical examination of received methodology of model-building in economics, the extended perspective?namely of integrating the moral law derived from the divine roots as the meta-epistemology?is rigorously studied. The example (...) of the Islamic prerogative in interpreting the holistic world-system through model-building in economics is highlighted. A religio-philosophical approach is adopted to exemplify some approaches in Islamic model-building. An especial focus is placed here on grassroots types of financing and activities. The critique of these models within the existing Islamic scholarship is carried out. The result is new dimensions of macroeconomic analysis that emanate in a logical way from the meta-epistemological approach, and oppose the mainstream ideas, both in received and Islamic economic thinking as of now. (shrink)

The article highlights the issues of modeling processes of a socio-economic nature, considers the problems and reveals the factors influencing the construction of the model algorithm. In our opinion, studies of economic processes undoubtedly affect the social side of the development of the territory. The scientific novelty lies in the development and testing of new approaches to the construction of a model that allows us to systematically characterize the processes taking place, based on the analysis of the (...) whole, territorial development, in relation to the structure of its parts, including human capital, which will make it possible to create a mechanism that ensures maneuverability in order to effectively use the potential of the region. As a result, an assessment of the current state of affairs for a certain subject of the Russian Federation is given, but some aspects touched upon in the study require an additional information block. The considered structural factors are determined in the share influence, which allows us to conclude about the regulation of processes with external and internal influence. (shrink)

We claim that the process of theoretical model refinement in economics is best characterised as robustness analysis: the systematic examination of the robustness of modelling results with respect to particular modelling assumptions. We argue that this practise has epistemic value by extending William Wimsatt's account of robustness analysis as triangulation via independent means of determination. For economists robustness analysis is a crucial methodological strategy because their models are often based on idealisations and abstractions, and it is usually difficult to tell (...) which idealisations are truly harmful. (shrink)

Optimization models have often been useful in attempting to understand the adaptive significance of behavioral traits. Originally such models were applied to isolated aspects of behavior, such as foraging, mating, or parental behavior. In reality, organisms live in complex, ever-changing environments, and are simultaneously concerned with many behavioral choices and their consequences. This target article describes a dynamic modeling technique that can be used to analyze behavior in a unified way. The technique has been widely used in behavioral studies (...) of insects, fish, birds, mammals, and other organisms. The models use biologically meaningful parameters and variables, and lead to testable predictions. Limitations arise because nature's complexity always exceeds our modeling capacity. (shrink)

Since the sixties, computational modeling has become increasingly important in both the physical and the social sciences, particularly in physics, theoretical biology, sociology, and economics. Sine the eighties, philosophers too have begun to apply computational modeling to questions in logic, epistemology, philosophy of science, philosophy of mind, philosophy of language, philosophy of biology, ethics, and social and political philosophy. This chapter analyzes a selection of interesting examples in some of those areas.

p. cm. — (Zeuthen lecture book series) Includes bibliographical references (p. ) and index. ISBN 0-262-18187-8 (hardcover : alk. paper). — ISBN 0-262-68100-5 (pbk. : alk. paper) 1. Decision-making. 2. Economic man. 3. Game theory. 4. Rational expectations (Economic theory) I. Title. II. Series.

This essay examines the issue of false assumptions in models via a case study of a prominent economic model of sustainable development, wherein the assumption of an infinite future plays a central role. Two proposals are found to be helpful for this case, one based on the concept of derivational robustness and the other on understanding. Both suggest that the assumption of an infinite future, while arguably legitimate in some applications of the model, is problematic with respect to what (...) I call “Parfitian” welfare functions. This result is relevant to debates about discounting the future in economics and environmental ethics. (shrink)

(2013). Modeling herding behavior and its risks. Journal of Economic Methodology: Vol. 20, Methodology, Systemic Risk, and the Economics Profession, pp. 6-18. doi: 10.1080/1350178X.2013.774843.

Game theory has proved a useful tool in the study of simple economic models. However, numerous foundational issues remain unresolved. The situation is particularly confusing in respect of the non-cooperative analysis of games with some dynamic structure in which the choice of one move or another during the play of the game may convey valuable information to the other players. Without pausing for breath, it is easy to name at least 10 rival equilibrium notions for which a serious case (...) can be made that here is the “right” solution concept for such games. (shrink)

The topics of modeling and information come together in at least two ways. Computational modeling and simulation play an increasingly important role in science, across disciplines from mathematics through physics to economics and political science. The philosophical questions at issue are questions as to what modeling and simulation are adding, altering, or amplifying in terms of scientific information. What changes with regard to information acquisition, theoretical development, or empirical confirmation with contemporary tools of computational modeling? In (...) this sense the title of this article is read in the following way: What kind of information is modeling information? What kind of information does modeling give us? (shrink)

Economies are complicated systems encompassing micro behaviors, interaction patterns, and global regularities. Whether partial or general in scope, studies of economic systems must consider how to handle difficult real-world aspects such as asymmetric information, imperfect competition, strategic interaction, collective learning, and the possibility of multiple equilibria. Recent advances in analytical and computational tools are permitting new approaches to the quantitative study of these aspects. One such approach is Agent-based Computational Economics (ACE), the computational study of economic processes modeled (...) as dynamic systems of interacting agents. This chapter explores the potential advantages and disadvantages of ACE for the study of economic systems. General points are concretely illustrated using an ACE model of a two-sector decentralized market economy. Six issues are highlighted: Constructive understanding of production, pricing, and trade processes; the essential primacy of survival; strategic rivalry and market power; behavioral uncertainty and learning; the role of conventions and organizations; and the complex interactions among structural attributes, institutional arrangements, and behavioral dispositions. (shrink)

Economics is a culturally and politically powerful and contested discipline, and it has been that way as long as it has existed. For some commentators, economics is the "queen of the social sciences", while others view it as a "dismal science" (and both of these epithets allow for diverse interpretations; see Mäki 2002). Economics is also a discipline that deals with a dynamically complex subject matter and has a tradition of reducing this complexity by using systematic procedures of simplification. Nowadays, (...) these procedures involve for the most part building and using mathematical models (for an overview of the philosophical issues, see Morgan and Knuuttila 2011). In the dominant circles of the discipline, one is not regarded as a serious economist having a professional expert view on any given economic or social issue without having a model about it. Much of the power of the discipline and its characteristic contestations therefore involve models and modelling: the successes and failures of the dismal queen are those of modeling. The issues involved in conomic modeling have been made particularly acute once again by the financial crisis of 2008-2009 and its aftermath: the discipline of economics is among the candidates for the major blame for failure. I will first outline some thoughts about the characteristics disciplinary conventions that guide and constrain modeling in economics. I will then summarize my account of the very ideas of models and modeling. Finally, within the framework of that account, I will highlight some major issues of contestation and sketch the respective notions of potential success and failure in economic modeling with illustrations. These notions are motivated by my subscription to a (flexible and discipline-sensitive) realist philosophy of science (e.g. Mäki 2005). (shrink)

Climate change presents us with a problem of intergenerational justice. While any costs associated with climate change mitigation measures will have to be borne by the world’s present generation, the main beneficiaries of mitigation measures will be future generations. This raises the question to what extent present generations have a responsibility to shoulder these costs. One influential approach for addressing this question is to appeal to neo-classical economic cost–benefit analyses and so-called economy-climate “integrated assessment models” to determine what course (...) of action a principle of intergenerational welfare maximization would require of us. I critically examine a range of problems for this approach. First, integrated assessment models face a problem of underdetermination and induction: They are very sensitive to a number of highly conjectural assumptions about economic responses to a temperature and climate regime, for which we have no empirical evidence. Second, they involve several simplifying assumptions which cannot be justified empirically. And third, some of the assumptions underlying the construction of economic models are intrinsically normative assumptions that reflect value judgments of the modeler. I conclude that, while integrated assessment models may play a useful role as “toy models,” their use as tools for policy optimization is highly problematic. (shrink)

Citizenship, such as corporate citizenship and organizational citizenship, has been an important issue in business management for decades. This study proposes a research model from the perspectives of social identity and resource allocation, by examining the influence of corporate citizenship on organizational citizenship behaviors (OCBs). In the model, OCBs are positively influenced by perceived legal citizenship and perceived ethical citizenship, while negatively influenced by perceived discretionary citizenship. Empirical testing using a survey of personnel from 18 large firms confirms most of (...) our hypothesized effects. Theoretical and managerial implications of our findings are discussed. (shrink)

The purpose of the study is to establish a causal relationship of job satisfaction depending on the average number of employees, the level of wages, the number of applications and the time factor. The article deals with the problem of modeling socio-economic satisfaction with the work of employees in the provision of public services. Based on the correlation analysis, linear and nonlinear models of the interrelationships of factors related to this problem are formed. Econometric models have been developed (...) to effectively assess the level of satisfaction of employees in the provision of public services. The scientific novelty lies in the study of new models that are statistically superior to domestic developments in this field of activity. As a result, the most significant factors affecting the level of job satisfaction were identified. (shrink)

This is the second part of a two-part paper. It can be read independently of the first part provided that the reader is prepared to go along with the unorthodox views on game theory which were advanced in Part I and are summarized below. The body of the paper is an attempt to study some of the positive implications of such a viewpoint. This requires an exploration of what is involved in modeling “rational players” as computing machines.