On the Reliability of Economic Models

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1 On the Reliability of Economic Models

2 Recent Economic Thought Series Editors: Warren J. Samuels Michigan State University East Lansing, Michigan, USA William Darity, Jr. University of North Carolina Chapel Hill, North Carolina, USA Other books in the series: Mercuro, N., Taking Property and Just Compensation de Marchi, N., Post-Popperian Methodology of Economics Gapinski, J., The Economics of Saving Darity, Wo, Labor Economics: Problems in Analyzing Labor Markets Caldwell, Bo, and Boehm, So, Austrian Economics: Tensions and Directions Tool, Marc R., Institutional Economics: Theory, Method, Policy Babe, Robert E., Information and Communication in Economics Magnusson, Lars, Mercantilist Economics Garston, Neil, Bureaucracy: Three Paradigms Friedman, James Wo, Problems of Coordination in Economic Activity Magnusson, Lars, Evolutionary and Neo-Schumpeterian Approaches to Economics Reisman, Do, Economic Thought and Political Theory Burley, Po and Foster, Jo, Economics and Thermodynamics: New Perspectives on Economic Analysis Brennan, Ho Go, and Waterman, Ao Co, Economics and Religion: Are They Distinct? Klein, Philip A., The Role of Economic Theory Semmler, Willi, Business Cycles: Theory and Empirics

3 On the Reliability of Economic Models Essays in the Philosophy of Economics edited by Daniel Little Colgate University Springer Science+Business Media, LLC

4 Library of Congress Cataloging-in-Publication Data On the reliability of economic models: essays in the philosophy of economics I edited by Daniel Little. p. cm. - (Recent economic thought series) Includes bibliographical references and index. ISBN ISBN (ebook) DOI / Economics-Philosophy. 2. Economics-Mathematical models -Philosophy. 3. Reliability. I. Liltle. Daniel. 11. Series. HB '.01-dc20 CIP Copyright 1995 Springer Science+Business Media New York Originally published by Kluwer Academic Publishers in 1995 Softcover reprint of the hardcover 1 st edition 1995 All rights reserved. No part of this publication may be reproduced. stored in a retrieval system or transmilted in any form or by any means. mechanical. photo-copying. recording. or otherwise. without the prior wrilten perm iss ion of the publisher, Springer Science+Business Media, LLC. Printed on acid-free paper.

5 Contents 1 Introduction: Current Issues in the Philosophy of Economics Daniel Little 2 Causation and Explanation in Econometrics 9 James Woodward 3 Causal Structures in Econometrics 63 Nancy Cartwright Comments on Cartwright and Woodward: Causation, Estimation, and Statistics 75 Kevin Hoover 4 The Epistemic Foundations of Nash Equilibrium 91 Cristina Bicchieri Comments on Bicchieri: The Epistemic Foundations of Nash Equilibrium 138 Barton L. Lipman 5 Observing the Unobservable 147 David Schmidtz Comments on Schmidtz: Observing the Unobservable 173 Jeffrey Baldani v

6 vi CONTENTS 6 Parmenides and the Cliometricians 183 Margaret Schabas Comments on Schabas: The Nature and Significance of the "New" Economic History 203 A. W. Coats 7 Optimality Arguments and the Theory of the Firm 211 Harold Kincaid Comments on Kincaid: Optimality Arguments and the Theory of the Firm 236 Marina Bianchi 8 Economic Models in Development Economics 243 Daniel Little Comments on Little: Economic Models in Development Economics 271 Lance Taylor Index 281

7 Contributing Authors Daniel Little Associate Dean of Faculty Colgate University Hamilton, NY James Woodward Division of Humanities and Social Sciences California Institute of Technology, Pasadena, CA Nancy Cartwright Department of Philosophy, Logic, and Scientific Method London School of Economics Houghton Street London WC2A 2AE United Kingdom Cristina Bicchieri Department of Philosophy Carnegie Mellon University Pittsburgh, PA David Schmidtz Department of Philosophy BGSU Bowling Dreen, OH Margaret Schabas Department of Philosophy York University North York, Ontario M3J 1 P3 Canada Harold Kincaid Department of Philosophy University of Alabama at Birmingham Birmingham, AL Kevin Hoover University of California-Davis Davis, CA Barton L. Lipman University of Pennsylvania Philadelphia, PA Jeffrey Baldani vii

8 viii Colgate University Hamilton, NY A. W. Coats Box Duke University Durham, NC CONTRIBUTING AUTHORS Marina Bianchi Universita degli studi di Roma Rome, Italy Lance Taylor New School For Social Research 66 West 12th Street New York, NY 10011

9 On the Reliability of Economic Models

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