[...]... cafeteria was actually an innocent foray into the core of economic theory This is because economic theory is concerned precisely with the abstract concepts related to the interaction between people (the chapters without an asterisk) And the working tools of economic theory are mathematical models (the chapters with an asterisk) Economic fables Economic theory formulates thoughts via what we call “models.”... appropriate for economics), is completely subjective, controversial and therefore perhaps describes me no less than it describes economic theory At the Hebrew University of Jerusalem, where I studied, I had the opportunity to listen to many distinguished professors Two of them in particular contributed to the fact that I found myself engaging in economic theory One is unknown in the world of economics,... aware of the fact that you have invited me here to speak because I am a professor of economics who is supposed to know all this, and my ignorance definitely embarrasses me So you ask why I have come here? Because as an economic theorist, I would like to state that economic theory is exploited in discussions about current economic issues, and I don’t like it…, to put it mildly This statement is not just... from the model to real life In modern economics, the tales are expressed formally: words are represented by letters Economic concepts are housed within mathematical structures A typical tale looks like this: And an economic model looks like this: The use of formal language has its advantages Formal language imposes selfdiscipline on the storyteller A teller of economic tales who uses formal language... seen three examples of economic tales Let’s again ask ourselves the question: what is the connection between an economic model and reality? Different economists have different answers to this question According to one view, an economic model is supposed to serve as a basis for making predictions about the real world, not the world of tales Those holding this view perceive an economic model as an attempt... rational man The rational man’s pattern of thought constitutes the foundation for most economic models At the beginning of each course I teach on microeconomics or game theory, I find myself conducting an induction ceremony into the world of economic theory in which I expose the students to the portrait of the rational man in economics In order to endow this ceremony with the appropriate air of dignity, I... language and ordinary human speech almost completely prevents anyone who is not a member of the economic fraternity from criticizing “professional” economic claims Hotelling’s tale of the main street Harold Hotelling’s model of the main street is a simple model that is considered to be among the more successful ones in economic theory Two newsvendors compete for the custom of their city’s newspaper readers... real world, and apply it judiciously when we encounter situations similar to those portrayed in the tale In economic theory, as in Harry Potter, the Emperor’s New Clothes or the tales of King Solomon, we amuse ourselves in imaginary worlds Economic theory spins tales and calls them models An economic model is also somewhere between fantasy and reality Models can be denounced for being simplistic and... but claimed that their work with formal economic models sharpened their senses I am not unequivocally opposed to this approach and I assume that those who claim that economic models have sharpened their perception are genuine in expressing what they feel I also find myself from time to time looking at something from a perspective I have acquired from the study of economic theory But I am quite sure that... from the study of economic theory But I am quite sure that if instead of devoting my adult life to economic models I had engaged in a non-academic profession, I would view life from standpoints that are less abstract but no less useful Both of the approaches I have mentioned so far look for a purpose in an economic model Students look for a purpose in the material they study, because “Otherwise, why study?” . w0 h0" alt="" Economic Fables Ariel Rubinstein Economic Fables Economic Fables Introduction Rational, Irrational Game Theory: A Beautiful Mind The Jungle Tale and the Market Tale Economics, Pragmatics. Tale Economics, Pragmatics and Seven Traps (Sort of ) Economic Policy Bibliographical Notes Acknowledgements Economic Fables Ariel Rubinstein is Professor of Economics at Tel Aviv University and New York. Society. Copyright Copyright © 2012 Ariel Rubinstein Some rights are reserved. This book is made available under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License. This license