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

#tiword problem proportions, The scale of a map is 0.5 in 25mi the actua...

The scale of a map is 0.5 in 25mi the actual distance between two cities is 725mi write a proportion that represents the relationship how far apart will the cities be on the map

Greatest common factor, Greatest Common Factor The primary method for f...

Greatest Common Factor The primary method for factoring polynomials will be factoring the greatest common factor. While factoring in general it will also be the first thing

Trignometric functions, sir kindly guide me in 1st order linear equations.

sir kindly guide me in 1st order linear equations.

Compute standard and variance deviation, A firm is manufacturing 45,000 uni...

A firm is manufacturing 45,000 units of nuts. The probability of having a defective nut is 0.15 Compute the given i. The expected no. of defective nuts ii. The standard an

Mixing problems, In these problems we will begin with a substance which is ...

In these problems we will begin with a substance which is dissolved in a liquid. Liquid will be entering as well as leaving a holding tank. The liquid entering the tank may or may

Curve tracing, How we calculate region for curve tracing

How we calculate region for curve tracing

Estimate how much did larry spend, Larry purchased 3 pairs of pants for $24...

Larry purchased 3 pairs of pants for $24 each or have 5 shirts for $18 each. How much did Larry spend? Divide the miles through the time to find the rate; 3,060 ÷ 5 = 612 mph.

Operations Research inventory , A firm buys a product using the price sched...

A firm buys a product using the price schedule given in the table: The company estimate holding costs at 10% of the purchase price per year and ordering costs at $40 per order .

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