Suppose you now want to estimate if the starting age of the player impacts their salary. You estimate the following model,
where is the age at which the player started playing in the NBA.
In the model above, which one of the following is the main problem?

Question

Suppose you now want to estimate if the starting age of the player impacts their salary. You estimate the following model,

where is the age at which the player started playing in the NBA.

In the model above, which one of the following is the main problem?

Answer

The model will run, but standard errors of all coefficients will be zero.

Answer

There is no problem with the model above and everything will be estimated correctly.

Answer

The model can only estimate the coefficient estimates for two out of the three variables because   ,   , and    are perfectly collinear variables.

Answer

The model will produce biased coefficient estimates for   .

Crowdly