Kurt is trying to regress a model that studies market prices between similar products from different companies.During his study he realized that one of the independent variables,the competitor's price,was causing multicollinearity issues with the model.If Kurt removes the variable from the model,which of the following statistical phenomenon could affect Kurt's model?
A)specification bias
B)heteroscedasticity
C)sampling error
D)autocorrelation

Question

Quizplus · Accepted Answer

Removing an independent variable due to multicollinearity can lead to specification bias, which occurs when a model is misspecified and does not accurately capture the true relationship between the dependent and independent variables.

Kurt Is Trying to Regress a Model That Studies Market