Paul Pfleiderer on the Misuse of Economic Models

Paul Pfleiderer talks with host Russ Roberts about his recent paper critiquing what he calls "Chameleon Models," economic models that are thought to explain the real world with little analysis of the accuracy of their assumptions. Also discussed are Akerlof's market for lemons model, Friedman's idea that assumptions do not have to be reasonable as long as the model predicts what happens in the real world, and the dangers of leaping from a model's results to making policy recommendations.

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