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My answer to a question. Can some one lmk if my understanding of this is correct?
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Why is 2-stage residual inclusion (2SRI) a preferred model as compared to 2-stage predictor substitution (2SPS – which is similar to 2SLS) when our second stage regression in an IV analysis is a logistic regression?
Ans. Root mean square in 2SRI is less inflated. So the predicted values are closer to the true value.
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