Thursday, November 13, 2008

Readings: Rubinstein

"The word 'model' sounds more scientific than 'fable' or 'fairy tale' but I don't see much difference between them. The author of a fable draws a parallel to a situation in real life and has some moral he wishes to impart to the reader. The fable is an imaginary situation which is somewhere between fantasy and reality. Any fable can be dismissed as being unrealistic or simplistic but this is also the fable's advantage. Being something between fantasy and reality, a fable is free of extraneous details and annoying diversions. In this unencumbered state, we can clearly discern what cannot always be seen from the real world. On our return to reality, we are in possession of some sound advice or a relevant argument that can be used in the real world. We do exactly the same thing in economic theory."
Ariel Rubinstein, Lecture Notes in Microeconomic Theory (2007)

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