Toy models are highly idealized and extremely simple models. Although they are omnipresent across scientific disciplines, toy models are a surprisingly under-appreciated subject in the philosophy of science. The main philosophical puzzle regarding toy models concerns what the epistemic goal of toy modelling is. One promising proposal for answering this question is the claim that the epistemic goal of toy models is to provide individual scientists with understanding. The aim of this article is to precisely articulate and to defend this (...) claim. In particular, we will distinguish between autonomous and embedded toy models, and then argue that important examples of autonomous toy models are sometimes best interpreted to provide how-possibly understanding, while embedded toy models yield how-actually understanding, if certain conditions are satisfied. _1_ Introduction _2_ Embedded and Autonomous Toy Models _2.1_ Embedded toy models _2.2_ Autonomous toy models _2.3_ Qualification _3_ A Theory of Understanding for Toy Models _3.1_ Preliminaries and requirements _3.2_ The refined simple view _4_ Two Kinds of Understanding with Toy Models _4.1_ Embedded toy models and how-actually understanding _4.2_ Against a how-actually interpretation of all autonomous toy models _4.3_ The how-possibly interpretation of some autonomous toy models _5_ Conclusion. (shrink)

Toy models are highly idealized and extremely simple models. Although they are omnipresent across scientific disciplines, toy models are a surprisingly under-appreciated subject in the philosophy of science. The main philosophical puzzle regarding toy models is that it is an unsettled question what the epistemic goal of toy modeling is. One promising proposal for answering this question is the claim that the epistemic goal of toy models is to provide individual scientists with understanding. The aim of this paper is to (...) precisely articulate and to defend this claim. In particular, we will distinguish between autonomous and embedded toy models, and, then, argue that important examples of autonomous toy models are sometimes best interpreted to provide how-possibly understanding, while embedded toy models yield how-actually understanding, if certain conditions are satisfied. (shrink)

Much philosophical attention has been devoted to whether economic models explain, and more generally to how scientific models represent. Yet there is an issue more practically important to economics than either of these, which I label the efficiency question: regardless of how exactly models represent, or of whether their role is explanatory or something else, is current modeling practice an efficient way to achieve these goals – or should research efforts be redirected? In addition to showing how the efficiency question (...) has been relatively neglected, I give two examples of the kind of analysis it requires. (shrink)

As the world economy has for better or worse become more and more dependent on the financial markets, a rethinking of the role of finance in both theory and practice is necessary. I argue that such a rethinking requires a new look at the theories of finance that is philosophical in kind. In effect, as Martha Nussbaum claims, if the absence of philosophy in economics is arguably one of the main reasons for the flaws in certain economic theories, the absence (...) of philosophy in finance is one the main reasons for the flaws in our theories on financial systems. In this paper I discuss the mutual relations and benefits between finance and philosophy. First, I examine the contribution that philosophy can offer to finance by analyzing a few critical issues in financial ontology, financial methodology and financial mathematics. I argue that philosophy is essential to enabling finance to achieve the goals for which it was designed, not only because it is a valuable external addition, but also internally, since philosophy is the proper tool for bringing about new theories and approaches. Then, I examine the contribution that finance can offer to philosophy by analyzing the relationship between theory and practice, data and hypothesis, and prediction, description and control in the context of financial systems. I argue that finance can help us to rethink some philosophical tenets on these issues. (shrink)

In 1959, mathematician Mark Kac introduced a model, called the Kac ring, in order to elucidate the classical solution of Boltzmann to the problem of macroscopic irreversibility. However, the model is far from being a realistic representation of something. How can it be of any help here? In philosophy of science, it is often argued that models can provide explanations of the phenomenon they are said to approximate, in virtue of the truth they contain, and in spite of the idealisations (...) they are made of. On this view, idealisations are not supposed to contribute to any explaining, and should not affect the global representational function of the model. But the Kac ring is a toy model that is only made of idealisations, and is still used trustworthily to understand the treatment of irreversible phenomena in statistical mechanics. In the paper, my aim is to argue that each idealisation ingeniously designed by the mathematician maintains the representational function of the Kac ring with the general properties of macroscopic irreversibility under scrutiny. Such an active role of idealisations in the representing has so far been overlooked and reflects the art of modelling. (shrink)

I examine the role that mathematics plays in understanding and modelling finance, especially stock markets, and how philosophy affects it. To this end, I explore how mathematics penetrates finance via physics, constructing a ‘financial physics’, and I outline the philosophical backgrounds of this process, in particular the ‘philosophy of equilibrium’ and that of critical points or ‘out-of-equilibrium’. I discuss the main characteristics and a few weaknesses of these mathematizations of financial systems, notably econometrics and econophysics, and I compare the two (...) ways, top-down and bottom-up, of building mathematical approaches to finance. The top-down approach is the most used and the most conservative. I argue that it guarantees a mathematical account, but it is less effective than the more difficult bottom-up approach, which is more appropriate and which may end up without a mathematical account of financial phenomena. I then consider two important issues raised by a mathematical approach to finance, that is, the performative and the reversing side of mathematics, and an ethics of mathematics. In the first case I argue that mathematics not only can be a performative device, but it also enables ‘reversing’ dynamics, that is, a mathematical model may become not a representational tool, but a device of social engineering—a mathematical way of investigating what are the initial conditions and processes needed to obtain an intended result. In the second case I argue that this specific relation between mathematical modelling and prediction raises an ethical question in finance, namely, a responsible construction and use of the mathematical models provided by a financial physics. (shrink)

The results of Cubitt et al. on the spectral gap problem add a new chapter to the issue of undecidability in physics, as they show that it is impossible to decide whether the Hamiltonian of a quantum many-body system is gapped or gapless. This implies, amongst other things, that a reductionist viewpoint would be untenable. In this paper, we examine their proof and a few philosophical implications, in particular ones regarding models and limitative results. In more detail, we examine the (...) way these theorems model many-body quantum systems, and we question what, if anything, is the physical counterpart of the models used by Cubitt et al. We argue that these models are non-representational and that, even if they are so artificial that it is hard to imagine a physical system arising from them, they nonetheless offer an opportunity to learn about the world and the relation between mathematics and reality. On this basis, we draw the conclusion that their results do not undermine the reductionist viewpoint in a strong sense but leave the question open in a weak sense. (shrink)