ABSTRACT
Popper pointed out that a characteristic of the social sciences is that most of its objects are abstract, or theoretical, constructions, which are embodied in the form of models, like models of institutions. But models are not unique to the social sciences, and are frequently used in the natural sciences as well, as part of the method of explaining by way of reduction, or deduction from hypotheses. In the social science of economics, models are everywhere, but Popper thought models of this nature are really applications of theories to specific circumstances. The models of the theoretical social sciences are essentially descriptions or reconstructions of typical social situations. For Popper, then, rationality is a very useful principle of methodology in the social sciences, but not more than that. The "rationality" of rational expectations theory becomes, then, the degree to which expectations conform to what economic theory predicts.
