Suppose Yi = a +bZi +cWi +$i, where the $i are IID with expectation 0 and variance
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Suppose Yi = a +bZi +cWi +$i, where the $i are IID with expectation 0 and variance σ2. However, Wi may be endogeneous. Assume that Zi = 0 or 1 has been assigned at random, so the Z’s are independent of the W’s and $’s. Let bˆ be the coefficient of Z when the equation is estimated by OLS. True or false and explain: bˆ is an unbiased estimate of b.
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