= Solution
<Unobserved heterogeneity> is persistent variation between subjects arising from unmeasured characteristics. A subject-specific <latent variable> or <random intercept> can represent it. Subjects with high latent success propensities tend to succeed repeatedly, so their observed outcomes can have positive <serial correlation> even when outcomes are conditionally independent given that propensity. Apparent persistence therefore need not imply <true state dependence>.
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