Scientific Method
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1. Generate a question of causality in business, i.e., a question to the one we discussed in the text: “what is the effect of increasing the size of a banner ad on the click-through rate for the advertiser?” In doing so, you will have executed the first step in the scientific method. Then, explain how you would execute the remaining five steps of the scientific method for your question.
2. Explain the difference between the average treatment effect (ATE) and the effect of the treatment on the treated (ETT).
3. What is the primary reason that using non-experimental data to measure a treatment effect can be problematic?
4. Concisely explain why business data typically involves nonrandom assignment of strategic variables.
5. Suppose you have data on 200 firms, and half advertise on Google. If the advertising firms had higher sales than non-advertising firms before they started advertising on google, does this fact impact your ability to measure the effect of Google advertising on sales using these data.
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