Binary choice models for rare events data: a crop insurance fraud application |
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Authors: | Yufei Jin Roderick M Rejesus Bertis B Little |
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Institution: | 1. AGRICORP , Ontario, Canada;2. Department of Agricultural and Applied Economics , Texas Tech University , Lubbock, TX 79409;3. Center for Agribusiness Excellence , Tarleton State University , Stephenville, TX 76402 |
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Abstract: | This study implements a recently proposed score test that could help guide insurance fraud researchers in deciding whether to use a logit or a probit model in predicting insurance fraud probabilities, especially when the occurrence of ones in the dependent variable is much less than zeros. The test is easily implemented in a crop insurance fraud context and seems to be a promising method that could be applicable to analysing and detecting potentially fraudulent claims in various lines of insurance. |
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