Consider the following regression model: Yi = B1 + B2X2i + B3X3i + B4X4i + ui Using the model above show that the maximum likelihood estimator for the variance, var (ui||X2i, X3i, B4X4i), is biased (be sure to comment of the nature of the bias).

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Consider the following regression model:
Yi = B1 + B2X2i + ß3X3i + ß4X4i + ui
Using the model above show that the maximum
likelihood estimator for the variance, var (ui||X2i,
X3i, B4X4i), is biased (be sure to comment of
the nature of the bias).
Transcribed Image Text:Consider the following regression model: Yi = B1 + B2X2i + ß3X3i + ß4X4i + ui Using the model above show that the maximum likelihood estimator for the variance, var (ui||X2i, X3i, B4X4i), is biased (be sure to comment of the nature of the bias).
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