Which of the Following Is the Reason Polynomial RD Models

question 12

Multiple Choice

Which of the following is the reason polynomial RD models can be dangerous to use?

• A) There is no danger in using a polynomial model instead of a varying slopes model.
• B) Polynomial models are sensitive and can produce bumps at the cutoff that are larger than they should be.
• C) Polynomial models lead to further endogeneity when the error term is not continuous.
• D) Polynomial models can produce multicollinearity.

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Definitions:

Constant Rate

A fixed rate at which something occurs, such as growth or decline, over a particular period of time.

Parent-Subsidiary Organization

A corporate structure in which a parent company owns a controlling interest in one or more subsidiary companies, allowing for centralized governance and operational synergy.

Liabilities

Financial obligations or debts that a company or individual owes to others, which need to be settled over time.

Effectively Control

Effectively control in financial terms refers to the power to direct the financial and operational policies of an entity so as to gain benefits from its activities, often achieved through ownership, contracts, or other means.