14.04 | Fall 2020 | Undergraduate

Intermediate Microeconomic Theory

Lecture 19: Identification and Falsification

A theory which can always be made consistent with data has no content. A good theory is one which can be rejected. Algorithms can be used with data to show when consumer choice is irrational. Despite the notion that “anything goes” in general equilibrium theory, recent work shows what data are sufficient to allow rejection.

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Fall 2020
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