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

Sequences - calculus, Sequences Let us start off this section along wi...

Sequences Let us start off this section along with a discussion of just what a sequence is. A sequence is nothing much more than a list of numbers written in a particular orde

Calculate values of the derivative, First, see that the right hand side of ...

First, see that the right hand side of equation (2) is a polynomial and thus continuous. This implies that this can only change sign if this firstly goes by zero. Therefore, if the

Index of summation - sequences and series, Index of summation - Sequences a...

Index of summation - Sequences and Series Here now, in the i is termed as the index of summation or just index for short and note that the letter we employ to represent

Polynomials, In arithmetic, we deal with numbers. In contrast to this...

In arithmetic, we deal with numbers. In contrast to this, in algebra, we deal with symbols. These symbols are often represented by lower case alphabets. One of th

Find the average, The center of a national park is located at (0,0). A spec...

The center of a national park is located at (0,0). A special nature preserve is bounded by by straight lines connecting the points A at (3,2), B at (5,1), C at (8,4) and D at (6,5)

Find out the surface area of the solid - parametric curve, Find out the sur...

Find out the surface area of the solid acquired by rotating the following parametric curve about the x-axis. x = cos 3 θ y = sin 3 θ  0 ≤ θ ≤ ?/2 Solution We wil

Permuation and combination, how many words can be formed from letters of wo...

how many words can be formed from letters of word daughter such that each word contain 2vowles and 3consonant

What is the average of his four quiz grades, Andy earned the subsequent gra...

Andy earned the subsequent grades on his four math quizzes: 97, 78, 84, and 86. What is the average of his four quiz grades? To ?nd out the average, you must add the items (97

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