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

Learning to count in maths, Here we learn: 1) Discussed what counting me...

Here we learn: 1) Discussed what counting means, and stressed that it is not the ability to recite number names. 2) Talked about the need for a child to understand several pr

Greatest common factors, Lindy has 48 chocolate chip cookies and 64 vanilla...

Lindy has 48 chocolate chip cookies and 64 vanilla wafers. How many bags can lindy fill if she puts the chocolate chip cookies and the vanilla wafers in the same bags? She plans

Life mathametics, 20% of the total quantity of oil is 40 litres find the to...

20% of the total quantity of oil is 40 litres find the total quantity of oil in litres

Evaluate the infinite limits of given limits, Evaluate following limits. ...

Evaluate following limits. Solution Therefore we will taking a look at a couple of one-sided limits in addition to the normal limit here. In all three cases notice

Write down the system of differential equations, Write down the system of d...

Write down the system of differential equations for mass system and the spring above. Solution To assist us out let's first take a rapid look at a situation wherein both of

Money, how do you add 1,ooo and 100?

how do you add 1,ooo and 100?

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