chapter  6
Localising anomalies of economic theory
Pages 16

The concept of the localisation of an anomaly is taken from Lindley Darden's Theory Change in Science. Darden proposes that the resolution of an anomaly requires the localisation of the anomaly within one or more components of the theory, the modification of hypotheses to account for the anomaly and an evaluation of the modified hypotheses. The idea that statements face the tribunal of sense experience as a corporate body is called holism. Francesco Guala emphasises the importance of experimental control for the testing of single hypothesis. Guala's account thereby deals with the problem of underdetermination of theory by evidence, which is closely connected to the problem of the holism of confirmation. Werner Gth, Rolf Schmittberger and Bernd Schwarze investigated whether people who play the ultimatum game act as predicted by game theory, and especially whether people reject unfair offers. Anomalies behavioural economists have employed experimental methods to isolate critical assumptions of the standard theory as the sources of the anomalies.