Economics · Applied Econometrics

Instrumental Variables Lab — When OLS Lies

Three real published cases — schooling, the Vietnam draft, colonial institutions — walked end to end. Estimate naively with OLS, diagnose the bias, apply the canonical instrument, then defend the exclusion restriction against published critiques.

4 rounds Executive English, Español

Preview

About this simulation

Three real published cases — schooling, the Vietnam draft, colonial institutions — walked end to end. Estimate naively with OLS, diagnose the bias, apply the canonical instrument, then defend the exclusion restriction against published critiques. A credibility-revolution lab built on Angrist-Krueger 1991, Angrist 1990, and Acemoglu-Johnson-Robinson 2001.

Who it is for

An advanced simulation for participants used to working with the main frameworks and trade-offs of the subject, designed for executive education and experienced professionals.

How a session runs

  1. The instructor creates a session from the Eureka dashboard and invites the participants.
  2. Participants play 4 rounds. In each one they submit their decisions and the simulation calculates the results. The first round opens with: Estimate Naively.
  3. The simulation can be run in English, Español.
  4. The instructor follows each participant's progress and results from the dashboard, and uses the class results for the debrief.

Decisions participants make

The decisions participants make during the simulation:

  • OLS β̂ estimate
  • Dominant source of OLS bias
  • Instrument
  • IV (2SLS) β̂ estimate
  • Most pressing referee critique

What participants track

What participants follow on screen as the rounds go by:

  • The Three Cases
  • Case A — Returns to Schooling
  • Case B — Vietnam Draft Earnings
  • Case C — Institutions and Long-Run Growth
  • Per-Case Credibility Trajectory

Subjects covered

Designed for courses in Applied Econometrics.

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