Sample Selection Bias in Hedonic Pricing Models of Thoroughbred Broodmares

Matthew Muntifering and John Ng'ombe

Journal of Agribusiness, 2020, vol. 38, issue 2

Abstract: An issue with ordinary least squares estimations in hedonic pricing model literature is that they do not account for sample selection bias. In broodmare auctions, the purchase decision and whether a price is realized or zero is endogenous. This paper contributes tothe hedonic broodmare price analysis literature by implementing the Heckman sample selection regression to estimate a hedonic pricing model using data from the January 2020 Keenland Sale. Many published papers do not accommodate this selection process and may have biased coefficients. This paper further contributes methodologically to the thoroughbred broodmare literature by being the first to deliver a useful empirical application of a Bayesian Heckman selection model. The broodmare prospect, age,square of age, domestic status, and the day of the session are significant for broodmare pricing. These may be implemented within a profit-maximizing purchasing and breeding strategy.

Keywords: Agribusiness (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ags:jloagb:310559

DOI: 10.22004/ag.econ.310559

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