Suppose We Omit X₃ from the Following in a Bivariate $\beta$

question 20

Multiple Choice

Suppose we omit X₃ from the following in a bivariate model
Y_i = $\beta$ ₀ + $\beta$ ₁X_1i + $\beta$ ₂X_2i + $\varepsilon$ _i
And suppose each of the independent variables is completely uncorrelated with the other independent variables (i.e., they have been randomly chosen in a randomized experiment) . What is the consequence of omitting X₃ on $\beta$ ₁hat?

• A) No effect; \(\beta\)₁hat will be unbiased.
• B) \(\beta\)₁hat will be biased toward zero.
• C) \(\beta\)₁hat will be more positive than it should be.
• D) \(\beta\)₁hat will be less positive than it should be.

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