Alice uses the following adjustment for the regression-based beta:

Beta = regression-based beta (2/3) + 1 (1/3).

The second term in the right-hand side of the equation (i.e., 1 (1/3)) is based on the idea that the best forecast of beta for any stock is the market beta of 1.

question:

discuss possible change(s) that the above adjustment for beta may bring to the empirical evidence of "low beta bias" documented in the literature