In this thesis I illuminated the explanation paradox (2014) by Julian Reiss, by means of a new example: the game theoretical Spence Signalling model. The famous paradox goes as follows: economic models are false, and they are explanatory, however, only true accounts can explain. I discussed the main critics of this paradox, and showed how they attack the different premises. I discussed Robert Sugden’s credible worlds accounts in depth, as I find that the most promising way out of the paradox. I argued that the literature could benefit from streamlining the discussion and looking more closely at the different concepts that are in use.