Metaphorical Models and Credible Worlds: Insights from Small and Stylised Models

Abstract

All models of business and society are stylised simplifications. It is therefore important to consider the credibility and value of model-based insights and to recognise why and when small models are appropriate and helpful. I probe these issues in the light of two classic models from the economics literature that have intrigued some theoretical economists. Drawing on this work I identify properties of small models that make them useful for inductive reasoning and learning. Such small and metaphorical models, though highly stylised, need to be both plausible and sufficiently understandable to stimulate comparisons with the real world. It is from such comparisons that inductive reasoning stems. I show similar properties in the World Dynamics model that addresses global industrial growth and sustainability.