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Describe the Consequences of Estimating an Equation by OLS in the Presence

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Essay

Describe the consequences of estimating an equation by OLS in the presence of an endogenous regressor. How can you overcome these obstacles? Present an alternative estimator and state its properties.


Definitions:

Toy Dog

A term used to describe small dog breeds that are often kept as companions or pets, characterized by their compact size and playful nature.

Stimulus Generalization

A process in learning where a response to a specific stimulus becomes associated with similar stimuli.

Generalization Gradient

The spread or diffusion of a response to stimuli that are similar but not identical to the conditioned stimulus.

Stimulus Discrimination

The ability to differentiate between similar stimuli when only one of them is consistently associated with a particular response.

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