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The Replication Crisis as Market Failure

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  • John Quiggin

    (School of Economics, The University of Queensland, St Lucia QLD 4072, Australia)

Abstract

This paper begins with the observation that the constrained maximisation central to model estimation and hypothesis testing may be interpreted as a kind of profit maximisation. The output of estimation is a model that maximises some measure of model fit, subject to costs that may be interpreted as the shadow price of constraints imposed on the model. The replication crisis may be regarded as a market failure in which the price of “significant” results is lower than would be socially optimal.

Suggested Citation

  • John Quiggin, 2019. "The Replication Crisis as Market Failure," Econometrics, MDPI, vol. 7(4), pages 1-8, November.
    • Handle: RePEc:gam:jecnmx:v:7:y:2019:i:4:p:44-:d:290361
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    References listed on IDEAS

    as
    1. John P A Ioannidis, 2005. "Why Most Published Research Findings Are False," PLOS Medicine, Public Library of Science, vol. 2(8), pages 1-1, August.
    2. Kim, Jae H. & Ji, Philip Inyeob, 2015. "Significance testing in empirical finance: A critical review and assessment," Journal of Empirical Finance, Elsevier, vol. 34(C), pages 1-14.
    3. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    4. Michael Kosfeld & Markus Heinrichs & Paul J. Zak & Urs Fischbacher & Ernst Fehr, 2005. "Oxytocin increases trust in humans," Nature, Nature, vol. 435(7042), pages 673-676, June.
    5. Engle, Robert F., 1984. "Wald, likelihood ratio, and Lagrange multiplier tests in econometrics," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 13, pages 775-826, Elsevier.
    6. McCloskey, Donald N, 1985. "The Loss Function Has Been Mislaid: The Rhetoric of Significance Tests," American Economic Review, American Economic Association, vol. 75(2), pages 201-205, May.
    7. Anthony Lane & Moïra Mikolajczak & Evelyne Treinen & Dana Samson & Olivier Corneille & Philippe de Timary & Olivier Luminet, 2015. "Failed Replication of Oxytocin Effects on Trust: The Envelope Task Case," PLOS ONE, Public Library of Science, vol. 10(9), pages 1-10, September.
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    Cited by:

    1. Johnstone, David, 2022. "Accounting research and the significance test crisis," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 89(C).

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