The averaging effect means that as you average more and more observations from a given distribution,the variance of the average
A)increases.
B)decreases.
C)is unaffected.
D)could either increase,decrease,or stay the same.

Question

Quizplus · Accepted Answer

The variance of the average decreases as more observations are averaged together, due to the law of large numbers, which states that the average of the results obtained from a large number of trials should be close to the expected value, and will tend to become closer as more trials are performed.

The Averaging Effect Means That as You Average More and More