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

Permutation and combination, howmany numbers made by digit 0,1,2,3,5,7,9 bu...

howmany numbers made by digit 0,1,2,3,5,7,9 but any digit isnot repeted

Lattice or complement lattice, Let  be the set of all divisors of n. Constr...

Let  be the set of all divisors of n. Construct a Hasse diagram for D15, D20,D30. Check whether it is a lattice Or Complement lattice.

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

Trignometry, Define the given satatement : 1.sin90-sin89=sin10 using pythag...

Define the given satatement : 1.sin90-sin89=sin10 using pythagoras theoram 2. How can any value of sin and cosis always given any value of cosec.

Complex fractions, A small airplane used 5and2over3 gallons of fuel to fly ...

A small airplane used 5and2over3 gallons of fuel to fly a 2 hour trip.how many gallons were used each hour

Write triangles named by the lengths of their sides, Write Triangles Named ...

Write Triangles Named by the Lengths of Their Sides? An equilateral triangle is a triangle with three congruent sides. All three sides of this triangle are the same lengt

What is the smaller probable value of this number, The sum of the square of...

The sum of the square of a number and 12 times the number is -27. What is the smaller probable value of this number? Let x = the number.  The statement that is "The sum of the

Give the introduction to amino acid and nucleotide metabolis, Give the Intr...

Give the Introduction to amino ACID and nucleotide metabolism ? Here, we studied about the chemistry of proteins and amino acids. We studied that the amino acids are used for p

Consumer behavior, explain big 5 ppersonality model, suggest thier target m...

explain big 5 ppersonality model, suggest thier target market and one marketing strategiy for each .

Solve the fractional equation, Solve the fractional equation: Example...

Solve the fractional equation: Example: Solve the fractional equation 1/(x-2) +1/(x+3) =0 Solution: The LCD is (x - 2)(x + 3); therefore, multiply both sides of t

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