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

What is this distance expressed in standard notation, The distance from the...

The distance from the sun to the earth is approximately 9.3 × 10 7 miles. What is this distance expressed in standard notation? In order to convert this number to standard not

Determine the circumference, If Gretta's bicycle has a 25-inch radius wheel...

If Gretta's bicycle has a 25-inch radius wheel, how far will she travel in two turns of the wheel? (π = 3.14) a. 491 in b. 78.5 in c. 100 in d. 157 in d. To determin

Reduction formulae, Reduction formulae Script for Introduction: ...

Reduction formulae Script for Introduction: First let us know what is meant by reduction formula. In simple words,                 A formula which expressess(or re

Find the circumference of a circle, Find the circumference of a circle whos...

Find the circumference of a circle whose area is 16 times the area of the circle with diameter 7cm            (Ans: 88cm) Ans:     Π R 2 = 16 Π  r 2 R 2 = 16 r 2

Shares and divident, A man invest ?13500 partly in shares paying 6% at ?140...

A man invest ?13500 partly in shares paying 6% at ?140 and partly in 5% at 125.If he is tolal income is 560, how much has he invested in each?

Trigonometry.., if b+c=3a then the value of cotB/2.cotC/2 is equal to

if b+c=3a then the value of cotB/2.cotC/2 is equal to

Radius of convergence - sequences and series, Radius of Convergence We ...

Radius of Convergence We will be capable to illustrate that there is a number R so that the power series will converge for, |x - a| R.  This number is known as the radius of

Describe about parallel and perpendicular lines, Describe about Parallel an...

Describe about Parallel and Perpendicular Lines ? Parallel Lines : Parallel lines are coplanar lines (lines that lie in the same plane) that never intersect. The bl

Determine the total area of the land, John is planning to buy an irregularl...

John is planning to buy an irregularly shaped plot of land. Referring to the diagram, determine the total area of the land. a. 6,400 m 2 b. 5,200 m 2 c. 4,500 m 2 d.

Randy, write in factor form 9x3+9x5

write in factor form 9x3+9x5

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