Optimal transportation and the falsifiability of incompletely specified economic models

Ivar Ekeland, Alfred Galichon, Marc Henry

    Research output: Contribution to journalArticlepeer-review

    Abstract

    A general framework is given to analyze the falsifiability of economic models based on a sample of their observable components. It is shown that, when the restrictions implied by the economic theory are insufficient to identify the unknown quantities of the structure, the duality of optimal transportation with zero-one cost function delivers interpretable and operational formulations of the hypothesis of specification correctness from which tests can be constructed to falsify the model.

    Original languageEnglish (US)
    Pages (from-to)355-374
    Number of pages20
    JournalEconomic Theory
    Volume42
    Issue number2
    DOIs
    StatePublished - Nov 2009

    Keywords

    • Incompletely specified models
    • Optimal transportation

    ASJC Scopus subject areas

    • Economics and Econometrics

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