In the sciences, a core tenet is that a model should encompass, or factor in, competing models’ insights. In Encompassing: Practical Applications Through Simulation, Robert C. Marshall and his co-authors introduce “an operational test” to determine if a model meets this criteria. Instead of the likelihood-based approach from over 4 decades prior, this book uses a simulation-based approach, which “is specifically designed to be applicable to serious nonlinear applications, under the minimal requirement that the models under consideration be amenable to Monte Carlo simulations.”
The authors believe that the method of simulated moments is ideal for calculating a variety of “formal simulation-based encompassing test statistics.” Simulation-based encompassing, they contend, is especially useful when the tested model contains new elements compared to an earlier “benchmark” model.
This publication is notably relevant to those seeking “to validate their models using simulation-based encompassing as a rigorous scientific alternative to more informal model comparisons,” including researchers, practitioners, and students at the graduate level.
Learn more and purchase the book here.
