Claim Validation

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 evade rejection strategically. In contrast, if experts are required to conclude that claims backed by sufficient 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. (JEL D82)