Question: The Linear Probability Model. (a) For the linear probability model described in (13.1), show that for E(ui) to equal zero, we must have Pr[yi =

The Linear Probability Model.

(a) For the linear probability model described in (13.1), show that for E(ui) to equal zero, we must have Pr[yi = 1]= x

iβ.

(b) Show that ui is heteroskedastic with var(ui) = x

iβ(1 − x

iβ).

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