Economic Theory

, Volume 42, Issue 2, pp 355–374 | Cite as

Optimal transportation and the falsifiability of incompletely specified economic models

Symposium

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.

Keywords

Incompletely specified models Optimal transportation 

JEL Classification

C10 C12 C13 C14 C52 C61 

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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.University of British Columbia and PIMSVancouverCanada
  2. 2.École polytechniqueParisFrance
  3. 3.Université de Montréal, CIRANO and CIREQMontrealCanada

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