Before revision: Economists are often confronted with the choice between a completely specified, yet approximate model and an incomplete model that only imposes a set of behavioral restrictions that are believed to be true. We offer a reconciliation of these approaches and demonstrate its usefulness for estimation and economic inference. The approximate model , which can be structural or statistical, is distorted such that to satisfy the equilibrium conditionswhich are deemed as credible .
After revision: Economists are often confronted with the choice between a completely specified, yet approximate model and an incomplete model that only imposes a set of credible behavioral conditions. This is done by distorting the approximate model to satisfy these conditions .