3.18 Models: Example: Linear model (Visualization)

Trust_i = b₀ + b₁Threat_i + b₁Education_i + \(\epsilon\)_i (Wikipedia)
Plane generated through equation above is not model of the data
- Admissible model must be consistent with all the data points
- Plane cannot be model, unless it exactly fits all the data points
- The error term, \(\epsilon\)_i, must be included in the model, so that it is consistent with all data points
Statistical inference:
- Assume some probability distributions for the \(\epsilon\)_i, e.g. i.i.d. Normal, with zero mean
- Model has 3 parameters: b₀, b₁, b₂