Linear Probability Model

Identify a limited dependent variable and its applications

Describe the linear probability model

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Identify merits and shortcomings of the linear probability model

Model probit and logit models as determined by the realization of latent variable

Calculate marginal effects for logit and probit models

Execute estimation of a probit and logit model via maximum likelihood

Identify the merits and shortcomings of the probit and logit models in practice

A dependent variable whose range of possible values has consequential constraints

Some constraints include upper and/or lower bounds or the ability to take on only discrete values

A limited dependent variable that can take on just two values, typically recorded as 0 and 1

Measure many different types of outcomes: purchase/don’t purchase, project success/project failure, employed/unemployed, approve/disapprove