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

Applied Math, Calucations of gradients find f Graph some level curve f=cons...

Calucations of gradients find f Graph some level curve f=const. f=9x^2 = 4y^2

Potency of a drug , An experiment designed to test the potency of a drug on...

An experiment designed to test the potency of a drug on 20 rats. Last animal studies have shown that a 10 mg dose of the drug is lethal 5% of the time within the first 4 hours; of

Process for solving linear equations, 1. If the equation has any fractions ...

1. If the equation has any fractions employ the least common denominator to apparent the fractions. We will do this through multiplying both sides of the equation by the LCD. Al

Show that the vector is in the perfect matching polytope, 1.  Let G = (V,E)...

1.  Let G = (V,E) be a graph for which all nodes have degree 5 and where G is 5-edge is connected. a) Show that the vector x which is indexed by the edges E and for which x e =

Area between two curves, Area between Two Curves We'll start with the ...

Area between Two Curves We'll start with the formula for finding the area among y = f(x) and y = g(x) on the interval [a,b].  We will also suppose that f(x) ≥ g(x) on [a,b].

Statistic, Suppose that the probability of your favorite baseball player ge...

Suppose that the probability of your favorite baseball player getting a hit at bat is 0.45. Assume that each at bat is independent. What is the probability that he bats eight times

Product and quotient rule, Product and Quotient Rule : Firstly let's se...

Product and Quotient Rule : Firstly let's see why we have to be careful with products & quotients.  Assume that we have the two functions f ( x ) = x 3   and g ( x ) = x 6 .

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