Evidence against Imposing Restrictions on Hurdle Models as a Test for Simultaneous versus Sequential Decision Making
William Burke
American Journal of Agricultural Economics, 2019, vol. 101, issue 5, 1473-1481
Abstract:
Agricultural economists frequently employ hurdle models to estimate the determinants of truncated outcomes such as market participation and adoption. A pervasive belief is that restrictions can be placed on hurdle models to test whether the decisions made in the underlying data-generating process occurred sequentially or simultaneously. This article argues against the ability to draw this conclusion and further submits there is a negative correlation between failing to reject these restrictions and sample size. Evidence to support both proposals comes from data collected in a natural setting, as well as simulated data with a known data-generating mechanism.
Keywords: Adoption; Craggit; hurdle models; market participation; sequential decision; simultaneous decision; Tobit (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:101:y:2019:i:5:p:1473-1481.
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