Least Squares estimators We want to choose values of bo and b, that minimize the sum squared error Ssb1)-∑|y(b0+b1x) Take the derivatives, set them equal to zero and you get ∑ Xi- mean(x))(y: mean(y) 0:= mean(y)-b 1 mean(x) b mean xLeast Squares Estimators • We want to choose values of bo and b1 that minimize the sum squared error SSE b , 0 b 1 i 2 yi b 0 b 1 xi . • Take the derivatives, set them equal to zero and you get b 1 i xi mean () x yi . mean ( ) y i xi mean () x 2 b 0 mean () y b ( ) 1 .mean x MIT