When Should a Heckit Model Be Used

question 15

Multiple Choice

When should a Heckit model be used?

• A)when the sample was not randomly selected
• B)when the sample is small and error terms are not normally distributed
• C)as the alternative model to run a Hausman test on a Tobit model
• D)to minimize the variance of the error term when the sample selection process is suspect

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Definitions:

Simultaneous

Occurring, operating, or done at the same time.

Sequential Decision

A process of making decisions one after another, where each decision is dependent on the outcome of previous decisions.

Collusion

An agreement, usually secretive, between two or more parties to limit competition, set prices, or manipulate market conditions.

Cartel Members

Firms or entities that agree to control prices and production to monopolize a market or restrict competition.