Measuring the Completeness of Economic Models
Journal of Political Economy, 2022
Abstract
Economic models are evaluated by testing the correctness of their predictions. We suggest an additional measure, "completeness": the fraction of the predictable variation in the data that the model captures. We calculate the completeness of prominent models in three problems from experimental economics: assigning certainty equivalents to lotteries, predicting initial play in games, and predicting human generation of random sequences. The completeness measure reveals new insights about these models, including how much room there is for improving their predictions.
BibTeX
@article{fudenberg2022measuring,
author = {Drew Fudenberg and Jon Kleinberg and Annie Liang and Sendhil Mullainathan},
title = {Measuring the Completeness of Economic Models},
journal = {Journal of Political Economy},
volume = {130},
number = {4},
pages = {956--990},
year = {2022}
}