This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. April 2011
  5. Falsifiability

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Falsifiability

  • Wojciech Olszewski
  • Alvaro Sandroni
American Economic Review
vol. 101, no. 2, April 2011
(pp. 788–818)
Download Full Text PDF

Abstract

We examine Popper's falsifiability within an economic model in which a tester hires a potential expert to produce a theory. Payments are contingent on the performance of the theory vis-à-vis data. We show that if experts are strategic, falsifiability has no power to distinguish scientific theories from worthless theories. The failure of falsification in screening informed and uninformed experts motivates questions on the broader concepts of refutation and verification. We demonstrate an asymmetry between the two concepts. Like falsification, verification contracts have no power to distinguish between informed and uninformed experts, but some refutation contracts are capable of screening experts. (JEL B41)

Citation

Olszewski, Wojciech, and Alvaro Sandroni. 2011. "Falsifiability." American Economic Review, 101 (2): 788–818. DOI: 10.1257/aer.101.2.788

JEL Classification

  • B41 Economic Methodology