As noted in Chapter 2, our first task is to estimate the population regression function (PRF) on the basis of the sample regression function (SRF) as accurately as possible. In Appendix A we have discussed two generally used methods of estimation: (1) ordinary least squares (OLS) and (2) maximum likelihood (ML). By and large, it is the method of OLS that is used extensively in regression analysis primarily because it is intuitively appealing and mathematically much simpler than the method of maximum likelihood. Besides, as we will show later, in the linear regression context the two methods generally give similar results.
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