On the Hidden Thought Experiments of Economic Theory

Abstract

Most papers in theoretical economics contain thought experiments. They take the form of more informal bits of reasoning that precede the presentation of the formal, mathematical models these papers are known for. These thought experiments differ from the formal models in various ways. In particular, they do not invoke the same idealized assumptions about the rationality, knowledge, and preferences of agents. The presence of thought experiments in papers that present formal models, and the fact that they differ from the formal models in this way, is often ignored in debates on what, if anything, we can learn from formal models in theoretical economics. I show that paying due attention to thought experiments in theoretical economics has serious implications for this debate. Differences between thought experiments and formal models are especially problematic for Robert Sugden’s “credible worlds” account.