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

Variation and proportion, i am not getting what miss has taught us please w...

i am not getting what miss has taught us please will you will help me in my studies

Conditional probability - rules of probability, Conditional probability - R...

Conditional probability - Rules of Probability This is the probability associated with combinations of events but given that some prior result has already been achieved with o

Activity example of one to one correspondence learning, Devise one activity...

Devise one activity each to help the child understand 'as many as' and 'one-to-one correspondence'. Try them out on a child/children in your neighbourhood, and record your observat

The median- graphical method -progression , The median - it is a stati...

The median - it is a statistical value which is usually located at the center of a given set of data that has been organized in the order of size or magnitude as illustrating,

Marketing management, successful marketing research relies on accurate iden...

successful marketing research relies on accurate identification of the research objectives. Critically discuss when setting relevant research objectives, drawing on marketing theor

Sciencetific notations, how would you answer a question like this on here ...

how would you answer a question like this on here (8x10^5)

Circls, in a given figure a,b,c and d are points on a circle such that ABC ...

in a given figure a,b,c and d are points on a circle such that ABC =40 and DAB= 60 find the measure of DBA

Derivatives for logarithm, Logarithm Functions : Now let's briefly get the...

Logarithm Functions : Now let's briefly get the derivatives for logarithms.  In this case we will have to start with the following fact regarding functions that are inverses of ea

Equivalent fractions, what is 6/36 as two equivalent fractions 2/12 as tw...

what is 6/36 as two equivalent fractions 2/12 as two equivalent fractions 4/28 3/21 2/11 4/13=8/x 12/30=n/90 q/54=2/9 3/7 14/h=7/20

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