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Bayesian Evaluation of a Specific Hypothesis

Author

Listed:
  • Edward O. Fryar
  • J. T. Arnold
  • James E. Dunn

Abstract

A bayesian procedure is developed to compute the posterior probability that a set of parameter estimates is arbitrarily close to a specified set of values. This procedure allows researchers to directly measure the evidence favoring a specific hypothesis. Because of the current inability to measure this evidence directly, some researchers are confusing the inability to reject a null hypothesis with the justification for accepting it and are thus committing a null hypothesis error. To illustrate the applicability of this new procedure, it is used to evaluate the evidence supporting one version of the efficient market hypothesis. Contrary to the results of an earlier study, little support was found for the efficient market hypothesis.

Suggested Citation

  • Edward O. Fryar & J. T. Arnold & James E. Dunn, 1988. "Bayesian Evaluation of a Specific Hypothesis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(3), pages 685-692.
    • Handle: RePEc:oup:ajagec:v:70:y:1988:i:3:p:685-692.
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    References listed on IDEAS

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    1. Sargent, Thomas J, 1976. "A Classical Macroeconometric Model for the United States," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 207-237, April.
    2. Maury E. Bredahl & Leonardo Green, 1983. "Residual Supplier Model of Coarse Grains Trade," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(4), pages 785-790.
    3. Edward O. Fryar, 1986. "Residual Supplier Model of Coarse Grains Trade: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(4), pages 1028-1029.
    4. Ciccolo, John H, Jr, 1978. "Money, Equity, Values, and Income: Tests for Exogeneity," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 10(1), pages 46-64, February.
    5. Sims, Christopher A, 1972. "Money, Income, and Causality," American Economic Review, American Economic Association, vol. 62(4), pages 540-552, September.
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    Cited by:

    1. Nepelski, Daniel, 2010. "Competition and Innovation: ICT- and non-ICT-enabled Product and Process Innovations," MPRA Paper 26243, University Library of Munich, Germany.

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