Defending De-idealization in Economic Modeling: A Case Study

Abstract

This paper defends the viability of de-idealization strategies in economic modeling against recent criticism. De-idealization occurs when an idealized assumption of a theoretical model is replaced with a more realistic one. Recently, some scholars have raised objections against the possibility or fruitfulness of de-idealizing economic models, suggesting that economists do not employ this kind of strategy. We present a detailed case study from the theory of industrial organization, discussing three different models, two of which can be construed as de-idealized versions of the first (the so-called Bertrand model of oligopoly). We conclude that recent pessimism about de-idealization in economics is largely unfounded, and that de-idealization strategies are not only possible but also widely employed in economics.

Gradual de-idealisation and progress in political science: a case study

“…However, it seems that both approaches that emphasise the secondary nature of the de-idealisation method and the approaches contrary to them-are based on overarching generalisations. This is because, in practice, the cognitive values of conceptions such as ITS are multifactorial and diverse in terms of field (Cassini, 2021;Peruzzi & Cevolani, 2022). In some fields, the de-idealisation method plays an important role, being one of the mechanisms of theoretical development, as I demonstrate in this article.…”

“…4 The nature of complex knowledge generation processes, particularly model-based theorising, challenges the factualist image of science. Reconstructions from different, often radically different, scientific disciplines show that theory building is not based on a faithful representation of the fragment of the analysed reality but on its skilful deformation (Godfrey-Smith, 2009;Jebeile & Kennedy, 2015;Morgan, 2006;Nowak, 2000a;Peruzzi & Cevolani, 2022;Seifert, 2020;Svetlova, 2013). One method that enables the theorist to deform the subject of consideration in a cognitively valuable manner is idealisation.…”

“…More recent analyses either criticise the picture of modelling described above (Knuuttila & Morgan, 2019;Reiss, 2012;Rice, 2019) or point out the complex nature of the relationship occurring between idealisation and de-idealisation while avoiding overly categorical statements (Cassini, 2021;Peruzzi & Cevolani, 2022). Gradual deidealisation is not always feasible, as some idealising assumptions are permanently ineliminable.…”