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

Solving decimal equations, The distance around a square photograph is 12.8 ...

The distance around a square photograph is 12.8 centimeters. What is the langth of each side of the fotograph?

Maximax method-decision making under uncertainty, MAXIMAX method Maxima...

MAXIMAX method Maximax method is based upon 'extreme optimism' the decision maker chooses that particular strategy which corresponds to the maximum of the maximum pay off for e

Integers, The Dolphins football team gained 16 yards on their first play th...

The Dolphins football team gained 16 yards on their first play then lost 11 yards on the next play. Write an addition expression to represent this situation.Find the sum an explain

Service marketing, assignment of marketing mix on healthservices

assignment of marketing mix on healthservices

Age problem, three years ago,Rica was thrice as old as dandy.Three years he...

three years ago,Rica was thrice as old as dandy.Three years hence,she will be twice as old.Find their present.

What is the prime factorization of 84, What is the prime factorization of 8...

What is the prime factorization of 84? This is the only answer choice which has only PRIME numbers. A prime number is a number along with two and only two distinct factors. In

Impediments in time series analysis, Impediments in time series analysis ...

Impediments in time series analysis Accuracy of data in reflecting a) Drastic changes for illustration in the advent of a major competitor, period of war or unexpected chan

Linear programming, Consider the following linear programming problem: M...

Consider the following linear programming problem: Min (12x 1 +18x 2 )             X 1 + 2x 2 ≤ 40             X 1 ≤ 50             X 1 + X 2 = 40             X

Determine the function f ( x ) , Determine the function f ( x ) .       ...

Determine the function f ( x ) .             f ′ ( x )= 4x 3 - 9 + 2 sin x + 7e x , f (0) = 15 Solution The first step is to integrate to fine out the most general pos

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