Chapter 5
A Change-Point Hazard Rate
Model
When looking at Figure 4.11 of the derived cumulative hazard curve in Chapter 4,
we can easily see a change-point on the curve. Two questions are naturally raised:
is this change-point real (statistically significant)? If so, how to locate the change-
point? The answers to these questions will be valuable to business decision making.
Chapter 5 tries to provide such answers by testing the hypothesis on the existence of
change-point(s) and offering effective ways to locate the change-point, when it exists.
We first review the related literature including both parametric and non-parametric
approaches in Section 5.1; and then introduce our methodologies in Section 5.2. Also
explained in this Section is how the iterations here differ from those in Chapter 3.
Revisiting the application and results are shown in Section 5.3.
81