Regression coefficients estimated using shrinkage estimators are biased.Which of the following statements accurately describe why these biased estimators yield more accurate predictions than an unbiased estimator?

(Check

all that

apply.)

A.

The shrinkage estimator introduces bias by shrinking the OLS estimator toward a specific point thereby reducing the mean of the estimator.

B.

The shrinkage estimator reduces the mean of the estimator, but this reduction is not enough for it to compensate for the increase in the squared bias, resulting in a greater MSPE than with OLS.

C.

The shrinkage estimator introduces bias by shrinking the OLS estimator toward a specific point thereby reducing the variance of the estimator.

D.

The shrinkage estimator reduces the variance of the estimator enough for it to more than compensate for the increase in the squared bias, resulting in a lower MSPE than with OLS.