Editing 2048: Curve-Fitting
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One notable time this is used is when a researcher studying housing economics is trying to identify housing submarkets. The assumption is that if two proposed markets are truly different, they will be better described using two different regression functions than if one were to be used. | One notable time this is used is when a researcher studying housing economics is trying to identify housing submarkets. The assumption is that if two proposed markets are truly different, they will be better described using two different regression functions than if one were to be used. | ||
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The additional curved lines visible in the graph are the kind of confidence intervals you'd get from a simple OLS regression if the standard assumptions were valid. In the case of two separate regressions, it would be surprising if all those assumptions (that is, i.i.d. Normal residuals around an underlying perfectly-linear function) were in fact valid for each part, especially if the slopes are not equal. | The additional curved lines visible in the graph are the kind of confidence intervals you'd get from a simple OLS regression if the standard assumptions were valid. In the case of two separate regressions, it would be surprising if all those assumptions (that is, i.i.d. Normal residuals around an underlying perfectly-linear function) were in fact valid for each part, especially if the slopes are not equal. |