Suppose that you€™ve been asked by the San Diego Padres baseball team to evaluate the economic impact of their new stadium by analyzing the team€™s attendance per game in the last year at their old stadium. After some research on the topic, you build the following model (standard errors in parentheses):

Where:

ATT_i = the attendance at the ith game

WIN_i = the winning percentage of the opponent in the ith game

FREE_i = a dummy variable equal to 1 if the ith game was a €œpromotion€ game at which something was given free to each fan, 0 otherwise

DAY_i = a dummy variable equal to 1 if the ith game was a day game and equal to 0 if the game was a night or twilight game

WEEK_i = a dummy variable equal to 1 if the ith game was during the week and equal to 0 if it was on the weekend

a. You expect the variables WIN and FREE to have positive coefficients. Create and test the appropriate hypotheses to evaluate these expectations at the 5-percent level.

b. You expect WEEK to have a negative coefficient. Create and test the appropriate hypotheses to evaluate these expectations at the 1-percent level.

c. You€™ve included the day game variable because your boss thinks it€™s important, but you€™re not sure about the impact of day games on attendance. Run a two-sided t-test around zero to test these expectations at the 5-percent level.

d. What problems appear to exist in your equation?

e. Which of the problems that you outlined in part d is the most worrisome? Explain your answer.

f. What explanation or solution can you think of for this problem?

Transcribed Image Text:

25000 + 15000WIN; + 4000 FREE; – 3000DAY; – 12000WEEK; ATT, (2000) (15000) N = 35 (3000) (3000) R? = .41