Answered: (1) What are the two main reasons for…

(1) What are the two main reasons for inconsistent OLS standard errors (described in the textbook)? Describe these two problems are and how to fix each of them.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter20: The Problem Of Adverse Selection Moral Hazard

Section: Chapter Questions

Problem 3MC

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(1) What are the two main reasons for inconsistent OLS standard errors (described in the textbook)?
Describe these two problems are and how to fix each of them.
(2.a) What are the two threats to external validity (described in the textbook)?
(2.b) Suppose we just studied the effect of schooling on incomes using data from the USA. Explain why it
may be challenging to generalize the study results to India.
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