Hello,
I've just located the illuminating explanation by Douglas Bates on degrees 
of freedom in mixed models.
The take-home message appears to be: don't trust the p-values from lme.
Questions:
Should I give up hypothesis testing for fixed effects terms in mixed models?
Has my time spent reading Pinheiro & Bates been in vain?
Is there a publication on this issue?

Thanks,
Dan Bebber

Department of Plant Sciences
University of Oxford

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