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

Economics, A mortgage lender seeks to maximize the expected value of its po...

A mortgage lender seeks to maximize the expected value of its portfolio. The portfolio, of course, is the sum of all of the mortgages in it, so no generality is lost by examining t

Special forms of polynomial, Special Forms There are a number of nice s...

Special Forms There are a number of nice special forms of some polynomials which can make factoring easier for us on occasion. Following are the special forms. a 2 + 2ab +

1, use 3/8 of a thin of paint, what fraction of the paint is left in thin (...

use 3/8 of a thin of paint, what fraction of the paint is left in thin (show work

Arithmetic/geometric sequences and binomial expansion, find s10 for the ari...

find s10 for the arithmetic sequenxe inwhich a1=5 and a10=68

Math problem, integral from 0 to pi of dx/(a+b*cos(x)

integral from 0 to pi of dx/(a+b*cos(x)

Formulas, A house painter uses the formula, c = $110.50 + $39.50h, where c ...

A house painter uses the formula, c = $110.50 + $39.50h, where c is the total cost and h is the number of hours he works, to determine how much he charges his customers. How much s

rational nmber, every rational nmber is expressible either as a_________or...

every rational nmber is expressible either as a_________or as a____________decimal.

Find integer if consecutive even integers is the number 126, The sum of two...

The sum of two consecutive even integers is the number 126. What are the integers? Two consecutive even integers are numbers in sequence, such as 4 and 6 or -30 and -32, that a

What percent the girls surveyed said that area hockey sport, 450 girls were...

450 girls were surveyed about their favorite sport, 24% said in which basketball is their favorite sport, 13% said in which ice hockey is their favorite sport, and 41% said which s

Decimals, how to make 2.3 into a fraction?

how to make 2.3 into a fraction?

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