Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher

This paper formulates a simple, regenerative, optimal-stopping model of bus-eng ine replacement to describe the behavior of Harold Zurcher, superinte ndent of maintenance at the Madison (Wisconsin) Metropolitan Bus Comp any. Admittedly, few people are likely to take particular interest in Harold Zurcher and bus engine replacement per se. The author focuses on a specific individual and capital good because it provides a simp le, concrete framework to illustrate two ideas: (1) a "bottom-up" a pproach for modeling replacement investment and (2) a "nested fixed point" algorithm for estimating dynamic programming models of discre te choice. Copyright 1987 by The Econometric Society.