OLS Regression with Continuous Random Variables
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OLS Regression with Continuous Random Variables
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SOLVED: Consider three regression models, each fit to a training data set and a test data setwith a continuous response y and a continuous predictor x.• Model 1: y = ?0 ?1x• Model 2: y = ?0 ?1x ?2x2• Model 3: y = ?0 ?1x ?2x2 ?3x3 ?4x4 ?5x5 ?6x6 ?7x7 ?8x8Suppose the true model is given by y = 4 x2 ?, where ? ? N(µ = 0, ?2 = 0.1). Regarding thethree models,(a). Which model will be expected to have the lowest training mean squared error (MSE)? Why?(b). Which model will be
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