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

Find out the volume of the solid -y = (x -1) ( x - 3)2, Find out the volume...

Find out the volume of the solid obtained by rotating the region bounded by y = (x -1) ( x - 3) 2 and the x-axis about the y-axis. Solution Let's first graph the bounded r

Find the frame of a quadratic polynomial , If α, β are the zeros of the pol...

If α, β are the zeros of the polynomial x 2 +8x +6 frame a Quadratic polynomial whose zeros are a)  1/α and  1/β b) 1+ β/α , 1+ α/β. Ans. P(x) = x 2 +8x +6 α + β = -8

Factors in denominator and partial fraction decomposition, Factors in Denom...

Factors in Denominator and Partial Fraction Decomposition Factor in denominator Term in partial  fraction decomposition   ax + b

Probability., an insurance salesman sells policies to 5 men, all of identic...

an insurance salesman sells policies to 5 men, all of identical age in good health. the probability that a man of this particular age will be alive 30 years hence is 2/3.Find the p

What is limit x tends to 0 log(1+x)/x to the base a?, Here we will use the...

Here we will use the expansion method Firstly lim x-0 log a (1+x)/x firstly using log property we get: lim x-0 log a (1+x)-logx then we change the base of log i.e lim x-0 {l

Fractions, Andre''s boss asked him to arrange bolts placing the shortest bo...

Andre''s boss asked him to arrange bolts placing the shortest bolt near the front 1 and three fourth inch 1 and 5 eigths 1 and 11 sixteenths which is the shortest

What is graphing statistics explain , What is Graphing Statistics explain ?...

What is Graphing Statistics explain ? The number of times that an event occurs is called its frequency. One of the ways that you can compare or display different frequencies is

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