Back to Assignment

Attempts $0\mathrm{.}5$

Average $\frac{0\mathrm{.}5}{1}$

$14.$ Estimating the variance of the error term

Suppose you are interested in looking at the determinants of a ballplayer's salary, and use the following econometric model to do so:

salary $={}_0+{}_1$ WAR $+{}_2$age$+u$

where

WAR $=$ total number of wins above a replacement player

age $=$ age in years

$u=$ error term

You take a sample of $120$ individuals and collect data on each person's salary, WAR,

$R^2$ e$.$

observable estimator of the variance of the error term $({}^2)$ is