Chapter 1: Puzzles and myths: a general overview
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The puzzles of economics and finance predominantly take the form of empirical or conceptual anomalies that allegedly remain unresolved and present a challenge to economists. Empirical anomalies, hence puzzles, arise when the implication of a theory is inconsistent with observed economic data; that is, when empirical testing does not support the theory. Alternatively, a puzzle arises when an observed phenomenon cannot be explained. Myths arise because of dogmatic belief in some theories or propositions. Simple explanations are suggested for the Downs_Thompson paradox, the Tullock paradox, the Esterlin paradox, the Gibson paradox, the Giffen paradox, and others.