Contemporary tests for structural change are designed to detect a structural break within a given historical data set of fixed size. Due to the law of the iterated logarithm, these one-shot tests cannot be applied to monitor out-of-sample stability each time new data arrive. The authors propose...

The authors consider tests for changing trend that do not require prior knowledge about the location of the changepoint. The limiting distribution is derived from the functional central limit theorem and the critical value from the hitting probability of a Brownian bridge. Applying a test...

In this paper a new class of tests for parameter stability, the moving-estimates (ME) test, is proposed. It is shown that in the standard situation the ME test asymptotically equivalent to the maximal likelihood ratio test under the alternative of a temporary parameter shift. It is also shown...

This article presents a multiple hypothesis test procedure that combines two well known tests for structural change in the linear regression model, the CUSUM test and the recursive t test. The CUSUM test is run through the sequence of recursive residuals as usual; if the CUSUM plot does not...

Patient preferences have a social welfare interpretation consonant with a belief that the society affected by present decisions will last for a very long time. In stochastic settings, these preferences lead to justifications for variants of the precautionary principle.

Abstract. In many economic, political and social situations, circumstances change at random points in time, reacting is costly, and reactions appropri- ate to present circumstances may become inappropriate upon future changes, requiring further costly reaction. Waiting is informative if arrival...

We develop a counterterrorism model to analyze the effects of allowing a government agency to torture suspects when evidence of terrorist involvement is strong. We find that legalizing torture in strong-evidence cases has offsetting effects on agency incentives to counter terrorism by means...

We designed a platform with a betting mechanism for eliciting costly, dispersed information of different quality. Our objective is to elicit both dispersed information and the precision of the information so as to efficiently weight dispersed information to produce reliable forecasts. After...

Notions of cause and effect are fundamental to economic explanation. Despite the immediate intuitive content of price effects, income effects, and the like, rigorous foundations justifying well-posed discussions of cause and effect in the wide range of settings relevant to economics are still...