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The Domain Of Theories And Tests By The Realism Of Assumptions

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  • Thomas Mayer

Abstract

The principle that theories should be tested by the accuracy of their predictions but not by the realism of their assumptions needs to be qualified. As a practical matter we often need to evaluate the applicability of theories to cases for which they have not been tested by their predictions. Here we rely on the fact that theories are applicable only within a specific domain. In determining whether a specific case, for which no direct tests are available is within the theory's domain, we look primarily at whether the assumptions of the theory are as applicable to it as they are to the cases for which the theory has been successfully tested.

Suggested Citation

  • Thomas Mayer, "undated". "The Domain Of Theories And Tests By The Realism Of Assumptions," Department of Economics 98-11, California Davis - Department of Economics.
    • Handle: RePEc:fth:caldec:98-11
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    File URL: http://www.econ.ucdavis.edu/working_papers/98-11.pdf
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    1. Thomas Russell, 1997. "The rationality hypothesis in economics: from Wall Street to Main Street," Journal of Economic Methodology, Taylor & Francis Journals, vol. 4(1), pages 83-100.
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    8. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
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    Cited by:

    1. Frank Hindriks, 2005. "Unobservability, tractability and the battle of assumptions," Journal of Economic Methodology, Taylor & Francis Journals, vol. 12(3), pages 383-406.

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