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The Guidance of an Enterprise Economy$
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Martin Shubik and Eric Smith

Print publication date: 2016

Print ISBN-13: 9780262034630

Published to MIT Press Scholarship Online: May 2017

DOI: 10.7551/mitpress/9780262034630.001.0001

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Formalizing Measurement and Modeling: The Preinstitutional Society

Formalizing Measurement and Modeling: The Preinstitutional Society

(p.41) 3 Formalizing Measurement and Modeling: The Preinstitutional Society
The Guidance of an Enterprise Economy

Martin Shubik

Eric Smith

The MIT Press

In this chapter we introduce the concepts of symmetry, dimensions and scaling, which are fundamental to a principled construction and interpretation of minimal models in this book. We also introduce the formal models for production and preferences, which we call the “pre-institutional society”. Society defines the context within which the institutions of the polity and the economy exist. The pre-institutional society is meant to represent the shared layers of constraint within which the different economic institutions must function. Economic life is potentially complex in all its dimensions. In comparison to reality, the space of tractable models is small. The subject of this chapter is to develop criteria for categorizing models and criteria by which to judge the validity of using them as sufficient representations of economic phenomena.

Keywords:   Dimensional analysis, Symmetry, Aggregation, Measurement, scaling symmetries, estimation, degrees of freedom.

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