# 2. We want to investigate the degree how cummulative GPA for each student (GPA) is affected...

###### Question:

2. We want to investigate the degree how cummulative GPA for each student (GPA) is affected by the peers. This is based on the general belief that students in a group of students with higher GPA are likely to have higher GPA. The model is: GPA= Bo + B avg Peer GPA + Byability + u. where avg PeerGPA is the average GPA for the peer students and ability is a student's own ability We assume that this equation satisfies the Gauss-Markov assumptions. Let's suppose that high ability students form a group with students who have similar high ability. What do you expect the sign of bias in B, obtained from the simple linear regression of GPA on avg PeerGPA? Explain.

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