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

Interquarticles, (i may have spelled it wrong)but i forgot how to do them.

(i may have spelled it wrong)but i forgot how to do them.

Derivatives for logarithm, Logarithm Functions : Now let's briefly get the...

Logarithm Functions : Now let's briefly get the derivatives for logarithms.  In this case we will have to start with the following fact regarding functions that are inverses of ea

Linear equations in one variable, three prices are to be distributed in a q...

three prices are to be distributed in a quiz contest.The value of the second prize is five sixths the value of the first prize and the value of the third prize is fourfifth that of

Show inverse trigonometric functions, Q. Show Inverse Trigonometric Functio...

Q. Show Inverse Trigonometric Functions? Ans. Many functions, including trig functions, are invertible. The inverse of trig functions are called ‘inverse trig functions'.

Calculus, I need help with my calculus work

I need help with my calculus work

Determine the range of given algorithm, The division algorithm says that wh...

The division algorithm says that when a is divided by b, a unique quotient and remainder is obtained. For a fixed integer b where b ≥ 2, consider the function f : Z → Z given by f(

Applications of integrals, Applications of Integrals In this part we're...

Applications of Integrals In this part we're going to come across at some of the applications of integration.  It should be noted also that these kinds of applications are illu

Maths, whats 100 + 90 - 6

whats 100 + 90 - 6

Evaluate limit, Evaluate the given limit. Solution: In this quest...

Evaluate the given limit. Solution: In this question none of the earlier examples can help us. There's no factoring or simplifying to accomplish.  We can't rationalize &

Horizontal asymptotes, Horizontal asymptotes : Such as we can have vert...

Horizontal asymptotes : Such as we can have vertical asymptotes defined in terms of limits we can also have horizontal asymptotes explained in terms of limits. Definition

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