A COMPARISON OF BOOTSTRAP AND MONTE CARLO APPROACHES TO TESTING FOR SYMMETRY IN THE HOUCK'S MODEL

Abstract

The power of the Houck's model of asymmetry is examined via bootstrap and Monte Carlo techniques. The results of bootstrap and Monte Carlo simulations indicate that the power of the Houck's test for asymmetry depends on sample size, level of asymmetry and the amount of noise in the data generating process. Furthermore, the simulation results suggest that both bootstrap and Monte Carlo methods are effective in rejecting the false null hypothesis of symmetric adjustment in large samples with small error size and strong levels of asymmetry. However, in small samples, with large error size and subtle levels of asymmetry, the results suggest that asymmetry test based on bootstrap are powerful than those based on the Monte Carlo methods. I conclude that both bootstrap and Monte Carlo algorithms provide useful tools for investigating the power of the test of asymmetry.

Keywords

• Monte Carlo Simulation; Bootstrap Methods; Houck's Model; Power Test; Asymmetry