Qm
Statistics

Which of three candidate controls belongs in the regression?

bad-controlsconfoundercausal-inference

You want the total effect of a manager's experience (treatment) on fund returns (outcome). You are deciding whether to control for three candidate variables:

  • A: the firm's overall resources, which make a firm both hire experienced managers and earn higher returns.
  • B: the manager's average position size, which experience influences and which in turn affects returns.
  • C: whether the fund won an industry award, which both experience and returns push upward.

Classify A, B, and C as confounder, mediator, or collider, and say which to control for.

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The theory behind this question.

ATE, ATT and Other Treatment Effect EstimandsBad Controls and Post-Treatment BiasBerkson's ParadoxEstimating Conditional Average Treatment Effects With MLCausal Discovery from Observational Data

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