Suppose two economic models give the same predictions --- but one is simplistic and unrealistic in its assumptions while the other is rich in detail and resembles the real world more closely.If the sole goal of the economist is to predict, then the economist should use the simple and unrealistic model.

Question

Quizplus · Accepted Answer

If the goal is solely to predict, then using the simple and unrealistic model would be more efficient as it requires less data and computation. However, if the goal is to understand the mechanisms and implications of the economic phenomenon, then the rich and realistic model would be more appropriate.

Suppose Two Economic Models Give the Same Predictions --- but One