A consequence of the linear probability model always having heteroscedastic errors will be which of the following?
A) The coefficient estimates will be biased.
B) The R-squared measure will be above 1.
C) The intercept will be negative.
D) None of the answers is correct.

Question

Quizplus · Accepted Answer

The linear probability model's heteroscedastic errors do not inherently cause biased coefficient estimates, R-squared measures above 1, or negative intercepts. The primary issue with heteroscedasticity in this context is inefficient estimation, affecting the standard errors but not directly causing any of the issues listed in the options.

A Consequence of the Linear Probability Model Always Having Heteroscedastic