An Economic Model of Induction

Research output: Working paper

Abstract

Inductive generalization (i.e., validation of general claims based on empirical evidence) is a critical method in science that is also notoriously difficult to justify. In particular, induction is not required to test honestly produced claims. We examine the role of induction in an economic model where agents may strategically misrepresent what they know. Our main result shows that induction is required to test and potentially reject expert’s claims. This result provides an economic argument for induction based on incentive problems.
Original languageEnglish (US)
Number of pages17
StatePublished - Apr 23 2013

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