Regression diagnostics Model assumptions about the error term a The error e is a random variable with mean of zero, i.e., E(8=0 The variance of &, denoted by o is s the same for all values of the independent variable(s), i.e., Var(a=02 The values of a are independent The error sis a normally distributed random variable Slide 18Slide 18 Regression Diagnostics • Model assumptions about the error term  – The error  is a random variable with mean of zero, i.e., E() = 0 – The variance of , denoted by  2 , is the same for all values of the independent variable(s), i.e., Var() =  2 – The values of  are independent. – The error  is a normally distributed random variable