Abstract
This paper considers the meaning of the term “simulation” as it is commonly used in economics. A distinction is made between the relatively mechanical task of simulating a pre-existing mathematical model and the far more difficult task of building a simulation of some social process. It is argued that economists almost always use simulation in the first sense and, consequently, find it rather unimportant. Some economic objections to simulation are criticized, because they depend on a restricted understanding of the term, which has not itself been justified. Within a broader understanding of simulation, many of these objections can be shown to be unfounded. In addition, the paper describes a number of phenomena which are more amenable to simulation, in the broader sense, than to the usual type of mathematical economic modelling. The final part of the paper considers one particular, methodologically based, objection to simulation, that the process of developing deductive economic theories has a superior claim to “scientific rigour”. It is argued that, even taking the economic definition of rigour as given, simulation is actually more rigourous than mathematical modelling in several important respects.
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Chattoe, E. (1996). Why Are We Simulating Anyway? Some Answers from Economics. In: Troitzsch, K.G., Mueller, U., Gilbert, G.N., Doran, J.E. (eds) Social Science Microsimulation. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-03261-9_4
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DOI: https://doi.org/10.1007/978-3-662-03261-9_4
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