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Unformatted text preview: Computer Project 1-Common Errors + common error notes 4/3/07 lecture: please avoid these errors!!! BIG PICTURE ERRORS : cause of major problems: Fable: A student draws a straight line for E(y|x)^ when clearly a quadratic is indicated Not fully understanding the building blocks of the principles on p. 9: A,B,C and testing for Assumption A1 Discussion on Assumption A4-independence of residuals: Independence-Look at the Math research-did we have any variable like time, order, day in the data? No-so there was no way to order the data. We could get e(i) the ith residual, but it was unrelated to some order variable. On the otherhand with the auction problem, we were able to determine e(t) because an order variable was given (it turns out since the data was in the same order as the order variable, that e(i)=e(t)). To test for assumption A4, you should get and discuss: the plot of e(t) vs e(t-1), Durbin Watson d (see notes on previous project writeups- they may be helpful), and regress e(t) on e(t-1) and interpret the p value for beta1 (Ho: beta1=0 vs H1: beta1 not = 0). (Ho: beta1=0 vs H1: beta1 not = 0)....
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- Fall '10