Suppose You Are Given a Set of Regression Results on the Role

question 32

Multiple Choice

Suppose you are given a set of regression results on the role of a random treatment assignment experiment on the effect of an ad campaign on consumers' willingness to buy your product. The regression results report an R-squared of 0.04. How should you value the regression results?

• A) Not highly, the R-squared is far too low.
• B) Highly, despite the low R-squared it is likely the effect estimated is causal and valuable for active prediction.
• C) Highly, the R-squared value is still high enough to justify that the effect is causal.
• D) Not highly, the implied correlation of the R-squared is too low.

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Definitions:

Bounded Rationality

A concept that decision-makers are limited by their information, cognitive limitations, and time constraints when making choices.

Rationality Limitations

The boundaries and constraints on human decision-making ability caused by cognitive limitations, incomplete information, and time constraints.

Decision Making

The method of selecting options through recognizing a decision, collecting data, and evaluating different solutions.

Workers' Compensation

A form of insurance providing wage replacement and medical benefits to employees injured in the course of employment.