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

Define period, Q. Define Period, Amplitude and Phase Shift? Ans. P...

Q. Define Period, Amplitude and Phase Shift? Ans. Period, amplitude and phase shift are used when describing a sinusoidal curve The period of a function is the smallest

Basic operations for complex numbers, Now we have to discuss the basic oper...

Now we have to discuss the basic operations for complex numbers. We'll begin with addition & subtraction. The simplest way to think of adding and/or subtracting complex numbers is

Parabola, please i need the answers to x^_7x+10 i want the vertex,axis of s...

please i need the answers to x^_7x+10 i want the vertex,axis of semetery,y intersect and the x intercept

What is the area covered through the motion of the fan, The arm of a ceilin...

The arm of a ceiling fan measures a length of 25 in. What is the area covered through the motion of the fan blades while turned on? (π = 3.14) The ceiling fan follows a circula

Positive integer, (a)   Specify that  the sum of  the degrees  of all verti...

(a)   Specify that  the sum of  the degrees  of all vertices of a graph  is double the number of edges  in  the graph.                            (b)  Let G be a non directed gra

How much was invested at 12% if the total annual interest, Jackie invested ...

Jackie invested money in two different accounts, one of that earned 12% interest per year and another that earned 15% interest per year. The amount invested at 15% was 100 more tha

Determine the angle between dec, Using the example provided below, if the m...

Using the example provided below, if the measure ∠AEB = 5x + 40 and ∠BEC = x + 20, determine m∠DEC. a. 40° b. 25° c. 140° d. 65° c. The addition of the measurem

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