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Since people who work are selected non-randomly from the population, estimating the determinants of wages from the subpopulation who work may introduce bias. The Heckman correction takes place in two stages. In the first stage, the researcher formulates a model, based on economic theory, for the probability of working
Detection bias occurs when a phenomenon is more likely to be observed for a particular set of study subjects. For instance, the syndemic involving obesity and diabetes may mean doctors are more likely to look for diabetes in obese patients than in thinner patients, leading to an inflation in diabetes among obese patients because of skewed detection efforts.
Bias is a distinct concept from consistency: consistent estimators converge in probability to the true value of the parameter, but may be biased or unbiased (see bias versus consistency for more). All else being equal, an unbiased estimator is preferable to a biased estimator, although in practice, biased estimators (with generally small bias ...
There are limitations of and arguments against using field experiments in place of other research designs (e.g. lab experiments, survey experiments, observational studies, etc.). Given that field experiments necessarily take place in a specific geographic and political setting, there is a concern about extrapolating outcomes to formulate a ...
Experimental economics is the application of experimental methods [1] to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms.
In economic theory and econometrics, the term heterogeneity refers to differences across the units being studied. For example, a macroeconomic model in which consumers are assumed to differ from one another is said to have heterogeneous agents.
In cognitive science and behavioral economics, loss aversion refers to a cognitive bias in which the same situation is perceived as worse if it is framed as a loss, rather than a gain. [1] [2] It should not be confused with risk aversion, which describes the rational behavior of valuing an uncertain outcome at less than its expected value.
Bounded rationality is the idea that rationality is limited when individuals make decisions, and under these limitations, rational individuals will select a decision that is satisfactory rather than optimal.