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 the maximum number calories which consume from fats, Josephine is o...

Josephine is on an 1,800 calorie per day diet. She tries to remain her intake of fat to no more than 30% of her overall calories. Based on an 1,800 calorie a day diet, what is the

Determine the inverse function f ( x ), Given f ( x ) = 3x - 2 determine ...

Given f ( x ) = 3x - 2 determine     f -1 ( x ) . Solution Now, already we know what the inverse to this function is as already we've done some work with it.  Though, it

Developing an understanding ones tens and more, DEVELOPING AN UNDERSTANDING...

DEVELOPING AN UNDERSTANDING :  The other day I was showing the children's book '203 Cats' to my 7-year-old niece. She had recently learnt how to write large numerals in her school

Define a hamilton path, Define a Hamilton path. Determine if the following ...

Define a Hamilton path. Determine if the following graph has a Hamilton circuit. Ans: A path is known as a Hamiltonian path if it consists of every vertex of the graph e

Applications of series - estimating the value of a series, Estimating the V...

Estimating the Value of a Series One more application of series is not actually an application of infinite series.  It's much more an application of partial sums.  Actually, we

Normal to y=f(x) , If the normal to y=f(x) makes an angle of pie/4 with y-a...

If the normal to y=f(x) makes an angle of pie/4 with y-axis at (1,1) , then f''(x) is eqivalent to? Ans) The normal makes an angle 135 degree with the x axis. also f ''(1)

Linear programming , use the simplex method to solve the following lp probl...

use the simplex method to solve the following lp problem. max z = 107x1 + x2 + 2x3 subject to 14x1 + x2 - 6x3 + 3x4 = 7 16x1 + x2 - 6x3 3x1 - x2 - x3 x1,x2,x3,x4 > = 0

Geometry, how can you tell qhich trangle is sss,asa, sas, and aas s

how can you tell qhich trangle is sss,asa, sas, and aas s

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