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Full-Text Articles in Social and Behavioral Sciences
Testing For Monotonicity In Unobservables Under Unconfoundedness, Stefan Hoderlein, Liangjun Su, Halbert White, Thomas Tao Yang
Testing For Monotonicity In Unobservables Under Unconfoundedness, Stefan Hoderlein, Liangjun Su, Halbert White, Thomas Tao Yang
Research Collection School Of Economics
Monotonicity in a scalar unobservable is a common assumption when modeling heterogeneity in structural models. Among other things, it allows one to recover the underlying structural function from certain conditional quantiles of observables. Nevertheless, monotonicity is a strong assumption and in some economic applications unlikely to hold, e.g., random coefficient models. Its failure can have substantive adverse consequences, in particular inconsistency of any estimator that is based on it. Having a test for this hypothesis is hence desirable. This paper provides such a test for cross-section data. We show how to exploit an exclusion restriction together With a conditional independence …
Testing For Monotonicity In Unobservables Under Unconfoundedness, Stefan Hoderlein, Liangjun Su, Halbert White, Thomas Tao Yang
Testing For Monotonicity In Unobservables Under Unconfoundedness, Stefan Hoderlein, Liangjun Su, Halbert White, Thomas Tao Yang
Research Collection School Of Economics
Monotonicity in a scalar unobservable is a common assumption when modeling heterogeneity in structural models. Among other things, it allows one to recover the underlying structural function from certain conditional quantiles of observables. Nevertheless, monotonicity is a strong assumption and in some economic applications unlikely to hold, e.g., random coefficient models. Its failure can have substantive adverse consequences, in particular inconsistency of any estimator that is based on it. Having a test for this hypothesis is hence desirable. This paper provides such a test for cross-section data. We show how to exploit an exclusion restriction together with a conditional independence …
Specification Testing For Transformation Models With An Application To Generalized Accelerated Failure-Time Models, Arthur Lewbel, Xun Lu, Liangjun Su
Specification Testing For Transformation Models With An Application To Generalized Accelerated Failure-Time Models, Arthur Lewbel, Xun Lu, Liangjun Su
Research Collection School Of Economics
This paper provides a nonparametric test of the specification of a transformation model. Specifically, we test whether an observable outcome Y is monotonic in the sum of a function of observable covariates X plus an unobservable error U. Transformation models of this form are commonly assumed in economics, including, e.g., standard specifications of duration models and hedonic pricing models. Our test statistic is asymptotically normal under local alternatives and consistent against nonparametric alternatives violating the implied restriction. Monte Carlo experiments show that our test performs well in finite samples. We apply our results to test for specifications of generalized accelerated …
Specification Testing For Transformation Models, Arthur Lewbel, Xun Lu, Liangjun Su
Specification Testing For Transformation Models, Arthur Lewbel, Xun Lu, Liangjun Su
Research Collection School Of Economics
Consider a nonseparable model Y=R(X,U) where Y and X are observed, while U is unobserved and conditionally independent of X. This paper provides the first nonparametric test of whether R takes the form of a transformation model, meaning that Y is monotonic in the sum of a function of X plus a function of U. Transformation models of this form are commonly assumed in economics, including, e.g., standard specifications of duration models and hedonic pricing models. Our test statistic is asymptotically normal under local alternatives and consistent against nonparametric alternatives. Monte Carlo experiments show that our test performs well in …
Testing Monotonicity In Unobservables With Panel Data, Liangjun Su, Stefan Hoderlein, Halbert White
Testing Monotonicity In Unobservables With Panel Data, Liangjun Su, Stefan Hoderlein, Halbert White
Research Collection School Of Economics
Monotonicity in a scalar unobservable is a crucial identifying assumption for an important class of nonparametric structural models accommodating unobserved heterogeneity. Tests for this monotonicity have previously been unavailable. This paper proposes and analyzes tests for scalar monotonicity using panel data for structures with and without time-varying unobservables, either partially or fully nonseparable between observables and unobservables. Our nonparametric tests are computationally straightforward, have well behaved limiting distributions under the null, are consistent against precisely specified alternatives, and have standard local power properties. We provide straightforward bootstrap methods for inference. Some Monte Carlo experiments show that, for empirically relevant sample …
Specification Testing For Nonparametric Structural Models With Monotonicity In Unobservables, Stefan Hoderlein, Liangjun Su, Halbert White
Specification Testing For Nonparametric Structural Models With Monotonicity In Unobservables, Stefan Hoderlein, Liangjun Su, Halbert White
Research Collection School Of Economics
Monotonicity in a scalar unobservable is a now common assumption in economic theory and applications. Among other things, it allows one to recover the underlying structural function from certain conditional quantiles of observables. Nevertheless, monotonicity is a strong assumption, and its failure can have substantive adverse consequences for structural inference. So far, there are no generally applicable nonparametric specification tests designed to detect monotonicity failure. This paper provides such a test for cross-section data. We show how to exploit an exclusion restriction together with a conditional independence assumption, plausible in a variety of applications, to construct a test. Our statistic …
How Robust Is Undominated Nash Implementation?, Takashi Kunimoto
How Robust Is Undominated Nash Implementation?, Takashi Kunimoto
Research Collection School Of Economics
Palfrey and Srivastava (1991) show that almost any social choice correspondence(SCC) is implemented in undominated Nash equilibrium, a refinement of Nash equilibrium. By requiring solution concepts to have closed graph in the limit of complete information, Chung and Ely (2003) investigate the robustness of undominated Nash implementation. Their robustness test concludes that when preferences are strict (or more generally, hedonic), only monotonic SCCs can be implemented in the closure of the undominated Nash (equilibrium) correspondence. This paper re-examines this robustness test. I show that almost any SCC is implemented in the closure of the undominated Nash correspondence, provided that the …
A Semi-Parametric Two-Stage Projection Type Estimator Of Multivalued Treatment Effects, Aurobindo Ghosh
A Semi-Parametric Two-Stage Projection Type Estimator Of Multivalued Treatment Effects, Aurobindo Ghosh
Research Collection School Of Economics
One of the most well documented regularities in evaluation literature like returns to schooling(or funding for programs) is that several factors come together to confound the measurement of its effect. First, in observational studies the true return is often individual specific, and so it is almost impossible to use a traditional treatment effect models with randomly assigned treatment and control groups. This endogeneity in the model further exacerbates our inability to conduct such trials. Second, the problem is not a classical treatment effect measurement problem where we have discrete or more often binary treatments. Hence, techniques like measuring the Local …
Implementation With Near Complete Information: The Case Of Subgame Perfection, Takashi Kunimoto, Olivier Tercieux
Implementation With Near Complete Information: The Case Of Subgame Perfection, Takashi Kunimoto, Olivier Tercieux
Research Collection School Of Economics
While monotonicity is a necessary and almost sufficient condition for Nash implementationand often a demanding one, almost any (non-monotonic, for instance) socialchoice rule can be implemented using undominated Nash or subgame perfect equilibrium.By requiring solution concepts to have closed graph in the limit of completeinformation, Chung and Ely (2003) show that only monotonic social choice rules canbe implemented in the closure of the undominated Nash equilibrium correspondence.In this paper, we show that only monotonic social choice rules can be implemented inthe closure of the subgame perfect equilibrium/sequential equilibrium correspondence.Our robustness result helps understand the limits of subgame pefect implementation,which is …
School Entry, Educational Attainment And Quarter Of Birth: A Cautionary Tale Of Late, Rashmi Barua, Kevin Lang
School Entry, Educational Attainment And Quarter Of Birth: A Cautionary Tale Of Late, Rashmi Barua, Kevin Lang
Research Collection School Of Economics
Partly in response to increased testing and accountability, states and districts have been raising the minimum school entry age, but existing studies show mixed results regarding the effects of entry age. These studies may be severely biased because they violate the monotonicity assumption needed for LATE. We propose an instrument not subject to this bias and show no effect on the educational attainment of children born in the fourth quarter of moving from a December 31 to an earlier cutoff. We then estimate a structural model of optimal entry age that reconciles the different IV estimates including ours. We find …
Monotonicity Conditions And Inequality Imputation For Sample-Selection And Non-Response Problems, Myoung-Jae Lee
Monotonicity Conditions And Inequality Imputation For Sample-Selection And Non-Response Problems, Myoung-Jae Lee
Research Collection School Of Economics
Under a sample selection or non-response problem, where a response variable y is observed only when a condition δ = 1 is met, the identified mean E(y|δ = 1) is not equal to the desired mean E(y). But the monotonicity condition E(y|δ = 1) ≤ E(y|δ = 0) yields an informative bound E(y|δ = 1) ≤ E(y), which is enough for certain inferences. For example, in a majority voting with δ being the vote-turnout, it is enough to know if E(y) > 0.5 or not, for which E(y|δ = 1) > 0.5 is sufficient under the monotonicity. The main question is then …
Monotonicity Conditions And Inequality Imputation For Sample-Selection And Non-Response Problems, Myoung-Jae Lee
Monotonicity Conditions And Inequality Imputation For Sample-Selection And Non-Response Problems, Myoung-Jae Lee
Research Collection School Of Economics
Under a sample selection or non-response problem, where a response variable y is observed only when a condition δ = 1 is met, the identified mean E(y|δ = 1) is not equal to the desired mean E(y). But the monotonicity condition E(y|δ = 1) ≤ E(y|δ = 0) yields an informative bound E(y|δ = 1) ≤ E(y), which is enough for certain inferences. For example, in a majority voting with δ being the vote-turnout, it is enough to know if E(y) > 0.5 or not, for which E(y|δ = 1) > 0.5 is sufficient under the monotonicity. The main question is then …