Consider a regression with two variables, in which X_1i is the variable of interest and X_2i is the control variable. Conditional mean independence requires A)E(u_i|X_1i, X_2i)= E(u_i|X_2i) B)E(u_i|X_1i, X_2i)= E(u_i|X_1i) C)E(u_i|X_1i)= E(u_i|X_2i) D)E(u_i)= E(u_i|X_2i)

Question

Quizplus · Accepted Answer

Conditional mean independence requires that the error term u_i is independent of the variable of interest (X_1i) conditional on the control variable (X_2i), which is equivalent to saying that the conditional expectation of u_i given X_1i and X_2i is equal to the conditional expectation of u_i given only X_2i. Therefore, choice A is the correct answer.

Consider a Regression with Two Variables, in Which X1i Is

Consider a Regression with Two Variables, in Which X_1i Is