Question: Consider a binary response variable y and two explanatory variables x1 and x2. The following table contains the parameter estimates of the linear probability model

Consider a binary response variable y and two explanatory variables x1 and x2. The following table contains the parameter estimates of the linear probability model (LPM) and the logit model, with the associated p-values shown in parentheses.

Variable..................... LPM............. Logit

Constant.................... −0.40.............−2.20

................................(0.03)............ (0.01)

x1 ..............................0.32...............0.98

................................(0.04)............ (0.06)

x2............................ −0.04............. −0.20

................................(0.01)............ (0.01)

a. Comment on the significance of the variables.

b. What is the predicted probability implied by the linear probability model for x1 = 4 with x2 equal to 10 and 20?

c. What is the predicted probability implied by the logit model for x1 = 4 with x2 equal to 10 and 20?

Step by Step Solution

★★★★★

3.49 Rating (162 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a The LPM model has p values all less than 005 so we can conclude that all of the variables ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

1140-M-S-L-R(8795).docx

120 KBs Word File

Students Have Also Explored These Related Statistics Questions!

Consider a binary response variable y and an explanatory variable x that varies between 0 and 4. The linear model is estimated as = 1.11 + 0.54x. a. Compute the estimated probability for x = 2 and x...

Consider a binary response variable y and an explanatory variable x that varies between 0 and 50. The linear probability model is estimated as = 0.92 0.02x. a. Compute the estimated probability for...

Consider a binary response variable y and an explanatory variable x. The following table contains the parameter estimates of the linear probability model (LPM) and the logit model, with the...

Consider a binary response variable y and two predictor variables x1 and x2. The following table contains the parameter estimates of the linear probability model (LPM) and the logistic regression...

Consider a binary response variable y and two explanatory variables x, and x2. The following table contains the parameter estimates of the linear probability model (LPM) and the logistic regression...

Consider a binary response variable y and two predictor variables x 1 and x 2 . The following table contains the parameter estimates of the linear probability model (LPM) and the logistic regression...

Exercise 9-3 Algo Consider a binary response variable y and two predictor variables x1 and x2. The following table contains the parameter estimates of the linear probability model (LPM) and the...

Reconsider Prob. 3-100. Solve the problem using EES (or other) software. Again using the EES, compare the temperature of water for the three cases at constant specific volume over the pressure range...

Assets Liabilities and Equity Cash $40,000 Accounts payable $200,000 Accounts receivable 200,000 Accrued wages 50,000 Secured bank loan 150,000 Unsecured bank loan 250,000 Inventory 400,000 Mortgage...

Which of the following is a right given to patent owners? The right to hide your invention ideas and not reveal them until a specific period of time is passed. The right to exclude others from making...

The relationship between trade and the free flow of labor and capital across countries.

Numerous studies have shown that watching too much television hurts school grades. Others have argued that television is not necessarily a bad thing for children (Mail Online, July 18, 2009). Like...

Access the data labeled Work_Experfence from the text website. The data contain information on salary (in $) and work experience (in years) of 100 employees in a marketing firm. Estimate a model y =...

Consider the monthly rent (Rent) of a home in Ann Arbor, Michigan, as a function of the number of bedrooms (Beds), the number of bathrooms (Baths), and square footage (Sqft). a. Access the data...

Blossom Co. gathered the following information on power costs and factory machine usage for the last six months: Using the high-low method of analyzing costs, answer the following questions and show...

! Required information Problem 8-73 (LO 8-4) (Algo) [The following information applies to the questions displayed below.) In 2020, Laureen is currently single. She paid $2,800 of qualified tuition...

Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now...