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Why the Con Hasn't Been Taken Out of Econometrics

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Author Info
Martin Zelder ([1] aDepartment of Economics, Northwestern University, Evanston, IL 60208, USA.)
Abstract

Economists often decry the perceived tendency towards selective reporting of empirical results (“specification search”) in scholarly work. Yet, economists have largely neglected to analyze the incentive structures underlying this phenomenon of econometric “cons”. This paper endeavors to provide this analysis, posing a game-theoretic model of specification search. In this three-player game (author, journal, and profession), academic authors choose whether to report the “true” t-statistic associated with an empirical result, or whether to “con” by reporting a distorted t-statistic. Subsequently, both journal and profession must choose whether to bear the cost of “scrutinizing” the author's work (e.g., by reanalyzing his data). Multiple perfect Bayesian equilibria are found, including one where authors “con” and arc not detected, an equilibrium which may be Kaldor–Hicks efficient. Moreover, public and private mechanisms (existing or proposed) to curtail “conning” seem ineffectual. Eastern Economic Journal (2008) 34, 115–125. doi:10.1057/palgrave.eej.9050006

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Article provided by Palgrave Macmillan Journals in its journal Eastern Economic Journal.

Volume (Year): 34 (2008)
Issue (Month): 1 (Winter)
Pages: 115-125
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Handle: RePEc:pal:easeco:v:34:y:2008:i:1:p:115-125

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  8. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law & Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
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  10. Folster, S, 1995. "The Perils of Peer Review in Economics and Other Sciences," Journal of Evolutionary Economics, Springer, vol. 5(1), pages 43-57, February.
  11. Hedges, Larry V., 1997. "The promise of replication in labour economics," Labour Economics, Elsevier, vol. 4(2), pages 111-114, June. [Downloadable!] (restricted)
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