Question

4. Which of these is an advantage of probits over linear probability models? A. The coefficients...

4. Which of these is an advantage of probits over linear probability models?

A. The coefficients are easier to interpret.
B. You can only get predictions between 0 and 1.
C. They give you causal evidence, not just associations.
D. None of the above.

why

Homework Answers

Answer #1

One of the major disadvantage of Linear Probability model is its Unbounded Probability. The most basic probability law states that the probability of an event occurring must be contained within the interval [0,1]. But this basic law of probability is not satisfied by the Linear Probability Model always. Although most of the predicted probabilities from an LPM have sensible values (between 0 and 1), some predicted probabilities may have nonsensical values that are less than 0 or greater than 1.

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