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

Curve tracing, how to curve trace? and how to know whether the equation is ...

how to curve trace? and how to know whether the equation is a circle or parabola, hyperbola ellipse?

Find poq of tangents drawn to the circle, In figure, O is the centre of th...

In figure, O is the centre of the Circle .AP and AQ two tangents drawn to the circle. B is a point on the tangent QA and ∠ PAB = 125 ° , Find ∠ POQ. (Ans: 125 o ) An s:

Construction, draw a line OX=10CM and construct an angle xoy = 60. (b)bisec...

draw a line OX=10CM and construct an angle xoy = 60. (b)bisect the angle xoy and mark a point A on the bisector so that OA = 7cm

Last year a math textbook cost $54 what is this years cost, Last year, a ma...

Last year, a math textbook cost $54. This year the cost is 107 percent of what it was last year. What is this year's cost? a. $59.78 b. $57.78 c. $61.00 d. $50.22 To ?nd out

#title.square footage, The area of a rectangular yard is 480 square feet. T...

The area of a rectangular yard is 480 square feet. The yard is 24 feet wide. How many feet do I need to fence all four sides?

Rules for partial derivatives, Rules for Partial Derivatives ...

Rules for Partial Derivatives For a function, f = g (x, y) . h (x, y) = g (x, y)   + h

Problem word solving, Mrs. Jones and Mr. Graham had the same amount of mone...

Mrs. Jones and Mr. Graham had the same amount of money at first. After Mrs. Jones bought a computer that cost $2,055, she had 1/4 as much money as Mr. Graham. How much money di

Math, weather prediction on monsoon past data on project

weather prediction on monsoon past data on project

Demand Forecast, How should shoppers Stop develop its demand forecasts?

How should shoppers Stop develop its demand forecasts?

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