Claim Validation
Nabil Al-Najjar, Luciano Pomatto, Alvaro Sandroni
American Economic Review · 2014 · Volume 104 · Issue 11
Abstract
Hume (1748) challenged the idea that a general claim (e.g. "all swans are white") can be validated by empirical evidence, no matter how compelling. We examine this issue from the perspective of a tester who must accept or reject the forecasts of a potential expert. If experts can be skeptical about the validity of claims then they can strategically evade rejection. In contrast, if experts are required to conclude that claims backed by sucient evidence are likely to be true, then they can be tested and rejected. These results provide an economic rationale for claim validation based on incentive problems.
Keywords
Asymmetric and Private Information, Mechanism Design
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