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Modelplasticity and abductive decision making

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  • Subhadeep Mukhopadhyay

    (United Analytics and Computational Intelligence, Inc.)

Abstract

‘All models are wrong but some are useful’ Box (Robustness in statistics, Elsevier, pp 201–236, 1979). But, how to find those useful ones starting from an imperfect model? How to make informed data-driven decisions equipped with an imperfect model? These fundamental questions appear to be pervasive in virtually all empirical fields—including economics, finance, marketing, healthcare, climate change, defense planning, and operations research. This article presents a modern approach (builds on two core ideas: abductive thinking and density-sharpening principle) and practical guidelines to tackle these issues in a systematic manner.

Suggested Citation

  • Subhadeep Mukhopadhyay, 2023. "Modelplasticity and abductive decision making," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 46(1), pages 255-276, June.
    • Handle: RePEc:spr:decfin:v:46:y:2023:i:1:d:10.1007_s10203-023-00390-5
    DOI: 10.1007/s10203-023-00390-5
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    References listed on IDEAS

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    1. Lars Peter Hansen & Thomas J Sargent, 2014. "Uncertainty within Economic Models," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 9028, August.
    2. Simone Cerreia-Vioglio & Lars Peter Hansen & Fabio Maccheroni & Massimo Marinacci, 2020. "Making Decisions under Model Misspecification," Papers 2008.01071, arXiv.org, revised Aug 2022.
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    8. Deep Mukhopadhyay, 2021. "Abductive Inference and C. S. Peirce: 150 Years Later," Papers 2111.08054, arXiv.org, revised Feb 2023.
    9. Lars Peter Hansen & Thomas J. Sargent, 2001. "Acknowledging Misspecification in Macroeconomic Theory," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(3), pages 519-535, July.
    10. Subhadeep Mukhopadhyay, 2021. "Density Sharpening: Principles and Applications to Discrete Data Analysis," Papers 2108.07372, arXiv.org, revised Aug 2021.
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