A good economic theory should capture as many details about real-world behavior as possible. True or false?

Question

An economic theory:
a. is only useful if it rests on realistic assumptions
b. is an abstraction from reality.
c. should be as detailed as possible to model the complexity of the economy.

A good economic theory:
a. relies on simplifying assumptions in order to explain economic behavior.
b. does not rely on simplifying assumptions.
c. is normative and untestable.

Thank you.

simplicitus · Accepted Answer

http://web.mit.edu/krugman/www/dixit.html
http://web.mit.edu/krugman/www/hotdog.html
http://people.ischool.berkeley.edu/~hal/Papers/how.pdf
http://web.mit.edu/krugman/www/MINIMAC.html
http://delong.typepad.com/sdj/2012/07/microfounded-and-useful-models.html
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2012/01/mechanisms-vs-models.html
http://ineteconomics.org/people/brad-delong
http://asociologist.com/2011/11/30/brad-delong-qotd-on-the-density-of-models/
http://delong.typepad.com/sdj/2012/08/things-i-forgot-to-post-months-ago-does-stephen-williamson-understand-the-monetary-economics-he-teaches-edition.html
http://krugman.blogs.nytimes.com/2010/02/23/brad-delongs-foolishness/

A good economic theory should capture as many details about real-world behavior as possible. True or false?

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