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A Monte Carlo Analysis of Alternative Estimators in Models Involving Selectivity

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  • Hartman, Raymond S

Abstract

In a simultaneous-equation model involving selectivity, Monte Carlo and response-surface techniques are used to assess the performance of five estimators commonly applied to a behavioral equation conditioned on an endogenous binary selectivity decision. The estimators include least squares with an exogenous dummy variable for the selectivity decision, three two-stage estimators that employ the estimated probability of the selectivity decision, and full information maximum likelihood (FIML). Although formally inconsistent, least squares with dummy variables is found to perform nearly as well as FIML, based on mean squared error measures. All two-stage estimators are found to be seriously deficient in terms of robustness.

Suggested Citation

  • Hartman, Raymond S, 1991. "A Monte Carlo Analysis of Alternative Estimators in Models Involving Selectivity," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(1), pages 41-49, January.
  • Handle: RePEc:bes:jnlbes:v:9:y:1991:i:1:p:41-49
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    Cited by:

    1. McMillen, Daniel P., 1997. "Multiple Regime Bid-Rent Function Estimation," Journal of Urban Economics, Elsevier, vol. 41(2), pages 301-319, March.
    2. Salvatore Di Falco & Marcella Veronesi & Mahmud Yesuf, 2011. "Does Adaptation to Climate Change Provide Food Security? A Micro-Perspective from Ethiopia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(3), pages 825-842.
    3. Annabel Vanroose, 2014. "Factors that explain the regional expansion of microfinance institutions in Peru," Working Papers CEB 14-030, ULB -- Universite Libre de Bruxelles.
    4. Guilhem Bascle, 2008. "Controlling for endogeneity with instrumental variables in strategic management research," Post-Print hal-00576795, HAL.
    5. Franklin, Cortney A. & Fearn, Noelle E., 2008. "Gender, race, and formal court decision-making outcomes: Chivalry/paternalism, conflict theory or gender conflict?," Journal of Criminal Justice, Elsevier, vol. 36(3), pages 279-290, July.
    6. Salvatore Di Falco & Marcella Veronesi, 2014. "Managing Environmental Risk in Presence of Climate Change: The Role of Adaptation in the Nile Basin of Ethiopia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(4), pages 553-577, April.
    7. Muto, Sachio, 2006. "Estimation of the bid rent function with the usage decision model," Journal of Urban Economics, Elsevier, vol. 60(1), pages 33-49, July.
    8. McMillen, Daniel P. & McDonald, John F., 1998. "Suburban Subcenters and Employment Density in Metropolitan Chicago," Journal of Urban Economics, Elsevier, vol. 43(2), pages 157-180, March.
    9. Otter, Pieter W. & Scheer, Hiek van der & Wansbeek, Tom, 2006. "Optimal selection of households for direct marketing by joint modeling of the probability and quantity of response," CCSO Working Papers 200606, University of Groningen, CCSO Centre for Economic Research.
    10. Krishna, Vijesh V. & Euler, Michael & Siregar, Hermanto & Fathoni, Zakky & Qaim, Matin, 2015. "Farmer heterogeneity and differential livelihood impacts of oil palm expansion among smallholders in Sumatra, Indonesia," EFForTS Discussion Paper Series 13, University of Goettingen, Collaborative Research Centre 990 "EFForTS, Ecological and Socioeconomic Functions of Tropical Lowland Rainforest Transformation Systems (Sumatra, Indonesia)".
    11. Asfaw, Solomon & Shiferaw, Bekele A., 2010. "Agricultural Technology Adoption and Rural Poverty: Application of an Endogenous Switching Regression for Selected East African Countries," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 97049, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
    12. repec:dgr:rugccs:200606 is not listed on IDEAS

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