How Flexible is that Functional Form? Quantifying the Restrictiveness of Theories
Abstract/Contents
- Abstract
- We propose a new way to quantify the restrictiveness of an economic model, based on how well the model fits simulated, hypothetical data sets. The data sets are drawn at random from a distribution that satisfies some application dependent content restrictions (such as that people prefer more money to less). Models that can fit almost all hypothetical data well are not restrictive. To illustrate our approach, we evaluate the restrictiveness of popular behavioral models in two experimental settings–certainty equivalents and initial play–and explain how restrictiveness reveals new insights about each of the models.
Description
| Type of resource | text |
|---|---|
| Date created | August 10, 2021 |
Creators/Contributors
| Author | Fudenberg, Drew |
|---|---|
| Author | Gao, Wayne |
| Author | Liang, Annie |
| Organizer of meeting | Bernheim, B. Douglas |
| Organizer of meeting | Beshears, John |
| Organizer of meeting | Crawford, Vincent |
| Organizer of meeting | Laibson, David |
| Organizer of meeting | Malmendier, Ulrike |
Subjects
| Subject | economics |
|---|---|
| Genre | Text |
| Genre | Working paper |
| Genre | Grey literature |
Bibliographic information
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- Use and reproduction
- User agrees that, where applicable, content will not be used to identify or to otherwise infringe the privacy or confidentiality rights of individuals. Content distributed via the Stanford Digital Repository may be subject to additional license and use restrictions applied by the depositor.
- License
- This work is licensed under a Creative Commons Attribution 4.0 International license (CC BY).
Preferred citation
- Preferred citation
- Fudenberg, D., Gao, W., and Liang, A. (2022). How Flexible is that Functional Form? Quantifying the Restrictiveness of Theories. Stanford Digital Repository. Available at https://purl.stanford.edu/yh648hf6681
Collection
SITE Conference 2021
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- siteworkshop@stanford.edu
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