Which assumption is necessary for the expected value of b1hat to equal b1?
A) Errors are homoscedastic.
B) Errors are not correlated with each other.
C) The error is uncorrelated with the independent variable.
D) The error is uncorrelated with the dependent variable.

Question

Quizplus · Accepted Answer

The assumption necessary for the expected value of the estimator $ \hat{b}_1 $ (the estimated coefficient in a linear regression model) to equal the true parameter $ b_1 $ is that the errors (residuals) are uncorrelated with the independent variable. This ensures that the estimator is unbiased.

Which Assumption Is Necessary for the Expected Value of B1hat