Borrowing randomness, the idea behind instruments
Asked at AQR
You want the causal effect of a variable on an outcome , but is endogenous, correlated with the error term because of confounding or reverse causation, so OLS is biased. A colleague mentions using an "instrument."
Explain what an instrumental variable is, the conditions it must satisfy, and how it recovers the causal effect.
Your answer
This one is open-ended. Work it through, then check your reasoning against the full solution.