Stata Sg160: on boundary-value likelihood-ratio tests. Several Stata commands perform likelihood-ratio tests for the presence of overdispersion or random effects. By their very nature, these tests are boundary tests in that they test whether a positive-valued parameter is strictly greater than zero. In such cases, having the null space on the boundary makes standard likelihood ratio theory invalid and special consideration must be given to ensure that correct p-values are obtained. In particular, the correct p-values are shown to be one half of what was previously thought. This insert describes the problem in general terms and outlines the modifications to the affected commands that have resulted under Stata 7. nbreg; xtreg; streg; ..

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  1. Aoyagi, Masaki; Fr├ęchette, Guillaume: Collusion as public monitoring becomes noisy: Experimental evidence (2009)