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

How to converting decimals to percents, How to Converting Decimals to Perce...

How to Converting Decimals to Percents ? To convert a decimal to a percent: Move the decimal point two decimal places to the right. Place a percent sign after the resulting

Partial fraction decomposition - integration techniques, Partial Fraction D...

Partial Fraction Decomposition The procedure of taking a rational expression and splitting down it into simpler rational expressions which we can add or subtract to get the ori

Unbounded intervals, Intervals which extend indefinitely in both the ...

Intervals which extend indefinitely in both the directions are known as unbounded intervals. These are written with the aid of symbols +∞  and -  ∞  . The various types

Multiple integrals, how to convert double integral into polar coordinates a...

how to convert double integral into polar coordinates and change the limits of integration

Conscious consumer, I am comparing building a house and buying a house. whi...

I am comparing building a house and buying a house. which one of the option you would choose.

Demerits and merit-the geometric mean , The geometric mean Merits ...

The geometric mean Merits i.  This makes use of all the values described except while x = 0 or negative ii.   This is the best measure for industrial increase rates

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