Linear probability model, Mathematics

Assignment Help:

Pepsi:               A dummy variable where 1 denotes choice of Pepsi by the i-th customer and 0 otherwise

Price_P:           The price of a 2-liter bottle of Pepsi at the time of purchase

Price_7:           The price of a 2-liter bottle of 7-Up at the time of purchase

Price_C:           The price of a 2-liter bottle of Coke at the time of purchase

Disp_P:            A dummy variable where 1 denotes whether Pepsi was displayed at the time of purchase and 0 otherwise

The purpose of this exercise is to determine the factors that explain the choice of Pepsi over other types of colas.

  a. Using these data, estimate the probability (proportion) of a customer choosing Pepsi for (i) all cases; and (ii) for the cases where Pepsi is displayed.

  b. Assuming that a relationship exists between choosing Pepsi as the dependent variable and the rest as the independent variables, hypothesize the signs of the βk coefficients.

  c. Run 3 regressions of this relationship using a linear probability model, a logit model, and a probit model, and make a summary table including the estimated coefficients with their t/z ratios, R2, and the proportion of correct predictions coming from the 3 models.

  d. Calculate the proportion of correct predictions coming from the 3 models.

  e. Without running a significance test, evaluate the estimated coefficients.

  f.  Create a second table with the transformed coefficients of the logit and probit models to make them comparable to those of the linear probability model E.

 g. Using the 3 models, evaluate the probability of choosing Pepsi when Pepsi is displayed and when Pepsi is not displayed while the prices of all three drinks are equal at $1.50 per 2-liter bottle.


Related Discussions:- Linear probability model

Function that computes the product of two matrices, Write a function that c...

Write a function that computes the product of two matrices, one of size m × n, and the other of size n × p. Test your function in a program that passes the following two matrices t

#Regular Expression, Find the Regular Grammar for the following Regular Exp...

Find the Regular Grammar for the following Regular Expression: a(a+b)*(ab*+ba*)b.

Sketch the graph of the derivative of this function f '( x), Below is the s...

Below is the sketch of a function f ( x ) . Sketch the graph of the derivative of this function f ′ ( x ) . Solution : At first glance it seems to an all however impossib

Probability, Mike sells on the average 15 newspapers per week (Monday – Fri...

Mike sells on the average 15 newspapers per week (Monday – Friday). Find the probability that 2.1 In a given week he will sell all the newspapers

Find out general formula for tangent vector and unit vector, Find out the g...

Find out the general formula for the tangent vector and unit tangent vector to the curve specified by r → (t) = t 2 i → + 2 sin t j → + 2 cos t k → . Solution First,

Slope-intercept form, Slope-intercept form The ultimate special form of...

Slope-intercept form The ultimate special form of the equation of the line is possibly the one that most people are familiar with.  It is the slope-intercept form.  In this if

Algebra, Solve 2x^2 + 5x + 36

Solve 2x^2 + 5x + 36

Find the are length and sketch the level curves, 1) Find the are length of ...

1) Find the are length of r(t) = ( 1/2t^2, 1/3t^3, 1/3t^3) where t is between 1 and 3 (greater than or equal less than or equal) 2) Sketch the level curves of f(x,y) = x^2-2y^2

Objectives of ones tens and more, Objectives After studying this unit, ...

Objectives After studying this unit, you should be able to 1.  evolve and use alternative activities to clarify the learner's conceptual 2.  understanding of ones/tens/hu

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd