Understand · 1 of 4Self-paced
Test a price explanation
Price formation is nonlinear near capacity and network limits. A small demand change can have little effect in one interval and a large effect in another. A statistical relationship needs a physically and institutionally credible mechanism.
Read · work through an example · try it yourselfWatch the video
Working relationship
Counterfactual = rerun with one defined change, holding other assumptions explicit
What to keep separate
A high model fit does not prove that a predictor caused a market event.
Your task
Write a causal diagram and define one falsification test before fitting a model.