Explain why the estimator i1ij low,j defined by (6.3.18)(6.3.19) is biased low. Upward bias is eliminated
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Explain why the estimator θ i1···ijlow,j defined by (6.3.18)–(6.3.19) is biased low.
Upward bias is eliminated since the continuation value and the early exercise decision are determined from independent information sets. The early exercise decision is always suboptimal with a finite sample.
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The given information refers to an estimator 1ajlowj defined by equations 6318 6319 that is biased l...View the full answer
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