The manager has private information about the project profitability and he exerts unobservable levels of different kinds of effort in order to increase the feasibility of successfully completing the project in terms of meeting product specifications.
Thus, once we account for unobservable area level or time-varying factors, we find that rising violence did not increase relocation, either across states or municipalities.
After controlling for observable and unobservable area level characteristics, we find little evidence that homicides related to the drug war led to increased domestic migration.
In addition, we assume that the self-assessment value is driven by an underlying, unobservable actual level of risk aversion CS i * given by: C S i * = X i β + ξ i (6).
Estimating using a Hausman–Taylor model to control for the possible correlation between our explanatory variables and unobservable university-level effects, we find that the fees charged may influence the application decision of some students, but that any relationship between levels of fees and applications is non-linear.
Although we recognize that a simple geography-based measure of community is unlikely to embody the socio-cultural context in which households are residing, this is the closest proxy available in the existing data to effectively control for unobservable community-level effects.
That is, the node-varying error component is conditionally mean independent of node- and network-level observables and of the network, while the network-level unobservable could be correlated with node- and network-level characteristics and/or the network itself.
These variables also capture any region level unobservable omitted variables that either do not vary with time or that vary over time in a linear fashion.
Then, as in the "Local average models" section, we replace the network-level observables, Z, and the network-level unobservable, Lν in Eq. 10 with network fixed effects, (boldsymbol {L}tilde {boldsymbol {nu }}), where (tilde {boldsymbol {nu }}) is a M×1 vector that captures the network fixed effects.
The network-level unobservable, ν g, by contrast is allowed to be correlated with node- and network-level characteristics and/or the network.
