Simon Peters

Testing for the presence of a tremble in economic experiments

The classical trinity of tests is used to check for the presence of a tremble in economic experiments in which the response variable is binary. A tremble is said to occur when an agent makes a decision completely at random, without regard to the values taken by the explanatory variables. The properties of the tests are discussed, and an extension of the methodology is used to test for the presence of a tremble in binary panel data from a well-known economic experiment.

How is the benefit of mixed social networks altered by neighbourhood deprivation for ethnic groups

ABSTRACT Previous research has shown that people who are in poverty live in deprived neighbourhoods. Ethnic minority groups are more likely than the White majority to be poor and live in such areas. The likelihood of being poor may be reduced by having access to mixed social networks. But, for those living in deprived neighbourhoods there may be neither opportunities nor resources to form and maintain social networks that are mixed in terms of their ethnic or geographic composition. This paper tests this contention, for ethnic groups in the UK. Specifically, we use the UK’s largest household survey to examine the relationship between deprivation and mixing by investigating the following research questions: (1) Does neighbourhood deprivation alter the influence of mixed social network on poverty status? and (2) Is the influence of neighbourhood deprivation and social networks on poverty status equivalent for all ethnic minority groups? Our results suggest that high neighbourhood deprivation tends to over-ride the positive associations of geographically mixed social networks. Moreover, while this result is strong for the White British majority, there is only weak evidence that it holds for ethnic minority groups. This may imply that resource constraints restrict social network benefits, particularly for ethnic minorities.

Asymptotic expansions and the reliability of tests in accelerated failure time models

This paper gives matrix formilae for the O(n-1 ) cerrecti0n applicable to asymptotically efficient conditional moment tests. These formulae only require expectations of functions involving, at most, second order derivatives of the log-likelihood; unlike those previously providcd by Ferrari and Corddro(1994). The correction is used to assess the reliability of first order asymptotic theory for arbitrary residual-based diagnostics in a class of accelerated failure time models: this correction is always parameter free, depending only on the number of included covariates in the regression design. For all but one of the tests considered, first order theory is found to be extremely unreliable, even in quite large samples, although this may not be widely appreciated by applied workers.

On the Use of Enumeration for Investigating the Performance of HypothesisTests for Economic Models with a Discrete Response Variable

This article notes that it is now practical to use the method of enumerationto analyse the performance of estimators and hypothesis tests of fullyparametric binary data models. The general method is presented and thenemployed to investigate the power performance of a common misspecificationtest for the Probit model. The advantages, disadvantages and limitations ofenumeration compared with standard Monte Carlo simulation are thendiscussed. Finally, an example from experimental economics is used todemonstrate that the methodology can also be used in small empirical studies.