In this question the correctly copied excerpt from the paper used reproduces a typo that would make the findings of the paper invalid. The correct simulation setting is found in the paper cited within the paper used. (It is clear that one cannot use the variance in the paper the OP uses, an error variance of $300$ instead of $1$ would invalidate any findings.) Should we fix the excerpt presented and break compatibility with the original text or not? I checked other version of the paper used by the OP (here and here) and all have the same typo.
My thoughts first on what one does if one is writing a question:
If you're quoting a paper, you should quote it verbatim and then explain why the original is wrong (including quoting the correct statement from the earlier reference). If you really want to make it obvious, include "[sic]" inside the quote, immediately after the part that's wrong to highlight that's what the original says, which will alert people to the fact that it probably isn't right, and have them looking for the explanation of the issue.
If you're not making a direct quote you don't necessarily need to give the wrong statement but you should probably mention the issue to save people some confusion.
Now, if one is pondering editing a question:
- I think the same conventions apply, except I'd lean toward doing it in comments and giving the OP the opportunity to correct their own post first.