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

Developing pre-number concepts, DEVELOPING PRE-NUMBER CONCEPTS :  Previous...

DEVELOPING PRE-NUMBER CONCEPTS :  Previously you have read how children acquire concepts. You know that, for children to grasp a concept, they must be given several opportunities

SHARES AND DIVIDEND, i am a student of class 10 and need help for making my...

i am a student of class 10 and need help for making my project on shares and dividend

Lines- common polar coordinate graphs, Lines- Common Polar Coordinate Graph...

Lines- Common Polar Coordinate Graphs A few lines have quite simple equations in polar coordinates. 1.  θ = β We are able to see that this is a line by converting to Car

Permuttation, A telephoned dialled number 0 to 9.if 0 is dialled first the ...

A telephoned dialled number 0 to 9.if 0 is dialled first the caller is connected to the international exchange system.find the number of local calls that can be rung if a local num

Ryan gym membership costs him how much is every installment, Ryan's gym mem...

Ryan's gym membership costs him $390 per year. He pays this within twelve equal installments a year. How much is every installment? To ?nd out each installment, the total yearl

What is the length of the longer base, The longer base of a trapezoid is th...

The longer base of a trapezoid is three times the shorter base. The nonparallel sides are congruent. The nonparallel side is 5 cm more that the shorter base. The perimeter of the t

Differences of squares and other even powers, Differences of Squares (and o...

Differences of Squares (and other even powers) ? A square monomial is a monomial which is the square of another monomial. Here are some examples: 25 is the square of 5 x 2 i

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