Assume That the Variance Depends on a Third Variable, Wi $\frac { 1 } { W _ { i } }$

Multiple Choice

Assume that the variance depends on a third variable, Wi, which does not appear in the regression function, and that var(u_i|X_i,W_i) = ?₀+?₁ $\frac { 1 } { W _ { i } }$ One way to estimate ?₀ and ?₁consistently is to regress

A) $\hat {\mathrm { u }}$ _i on $w _ { i } ^ { 2 }$ using OLS
B) $\hat {\mathrm { u }}$ _i on $\frac { 1 } { W _ { i } }$ using OLS
C) $\hat { u } _ { i } ^ { 2 }$ on $\frac { X _ { i } } { W _ { i } }$ using OLS
D) $\hat { u } _ { i } ^ { 2 }$ on $\frac { 1 } { W _ { i } }$ using OLS