How do you think the violation of Assumption #3 (large outliers are unlikely) of
ID: 3371953 • Letter: H
Question
How do you think the violation of Assumption #3 (large outliers are unlikely) of the simple linear regression model affects the OLS estimators of the intercept and the slope? (To answer the question, tell me if the intercept and the slope will be biased or not. If it is biased, then use an specific example( it can be our textbook example of student performance and class size) with the appearance of an outlier to illustrate in what direction will the intercept and the slope will be biased, overestimate or underestimate.)
Explanation / Answer
The OLS Estimators will not be biased it all depends on the data that you are putting, if it contains outlier you should treat them.
Assumption 3 large outlier are unlikely doesn't fall under any assumption of ols estimator .
The assumption of OLS are :-
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