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

Trigonmetry, [3+tan20+tan80]/tan20+tan80

[3+tan20+tan80]/tan20+tan80

What is uniform distribution, Q. What is Uniform Distribution? Ans. ...

Q. What is Uniform Distribution? Ans. A distribution is the set of possible values of a random variable considered in terms of their theoretical or observed frequency. Th

Eigenvalues and eigenvectors, Review: Systems of Equations - The tradition...

Review: Systems of Equations - The traditional initial point for a linear algebra class. We will utilize linear algebra techniques to solve a system of equations. Review: Matr

Reduction-types of word problems related to subtraction, Reduction -when t...

Reduction -when the original amount and the balance or remainder are known, to find the part that has been given away. (e.g., there were 15 toffees in a container, and there are

Two circles touch each other externally, Two circles touch each other exter...

Two circles touch each other externally: Given: Two circles with respective centres C1 and C2 touch each other externaly at the point P. T is any point on the common tangent

How many hours does dee work, Susan begins work at 4:00 and Dee starts at 5...

Susan begins work at 4:00 and Dee starts at 5:00. They both finish at the similar time. If Susan works x hours, how many hours does Dee work? Since Susan started 1 hour before

How much time does larry spend on his dog each day, Larry spends 3/4 hour t...

Larry spends 3/4 hour twice a day walking and playing with his dog. He also spends 1/6 hour twice a day feeding his dog. How much time does Larry spend on his dog each day? Add

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