Measuring the Completeness of Economic Models

Drew Fudenberg, Jon Kleinberg, Annie Liang, Sendhil Mullainathan

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

Economic models are evaluated by testing the correctness of their predictions. We suggest an additional measure, “completeness”: the fraction of the predictable variation in the data that the model captures. We calculate the completeness of prominent models in three problems from experimental economics: assigning certainty equivalents to lotteries, predicting initial play in games, and predicting human generation of random sequences. The completeness measure reveals new insights about these models, including how much room there is for improving their predictions.

Original languageEnglish (US)
Pages (from-to)956-990
Number of pages35
JournalJournal of Political Economy
Volume130
Issue number4
DOIs
StatePublished - Apr 2022

ASJC Scopus subject areas

  • Economics and Econometrics

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