Question: To study the effectiveness of price discount on a six-pack of soft drink, a sample of 5,500 consumers was randomly assigned to 11 discount categories as shown in Table.
(a) Treating the redemption rate as the dependent variable and price discount as the regressor, see whether the logit model fits the data.l6
(b) See whether the probit model does as well as the logit model.
(c) Fit the LPM model to these data.
(d) Compare the results of the three models. Note that the coefficients of LPM and Logit models are related as follows: Slope coefficient of LPM = 0.25* Slope coefficient of Logit Intercept of LPM == 0.25* slope coefficient of Logit + 0.5.
