Encompassing and Specificity

Authors: 
Jean-Pierre Florens, David F. Hendry, Jean-Francois Richard
GREMAQ, Nuffield College, Duke University

Nov 30 1989

A model M1 is said to encompass another model M2 if the former can explain the results obtained by the latter. In this paper we propose a Bayesian notion of encompassing that essentially represents a concept of sufficiency among models. We introduce the parent notion of specificity which aims at measuring lack of encompassing. Operational approximations are offered to cover situations where exact solutions cannot be obtained.

Manuscript: 

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