Notes 1 Introduction

4 important questions on Notes 1 Introduction

What does the ceteris paribus analysis mean? / How does the ceteris paribus analysis work?

It works by holding all other factors fixed. For example, split your data group randomly if your treatment and control group both are chosen randomly it means that on average all other factors are fixed.

What is a possible solution for the problem that there is mostly observational data available? Such that a treatment and control group isn't possible.

Impose assumptions to simulate ceteris paribus analysis --> restrict relationship between x_j and u: zero conditional mean assumption.

What is the definition of a random variable (RV)

A random variable X is one that takes on numerical values and has an outcome that is determined by an experiment.
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What is a continuous RV

A random variable X that takes values in a continuum, often the entire set of real numbers R according to a probability density function f(x).

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