## Linear probability model

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Lid geworden op: 14 apr 2011, 12:10

### Linear probability model

Hee jongens,
kan iemand mij misschien helpen met de volgende vraag?

Is the linear probability model sometimes applicable in the sense that its predictions can be interpreted as probabilities? To answer this question, consider a binary response variable $y_{i}$ and dummy variables $d_{1i},....,d_{Mi}$ for exhaustive and mutually exclusive categories (each observations falls exactly into one category). Show that the fitted values from the regression of data $y_{i}$ on $d_{1i},....,d_{Mi}$ (without intercept) are always in the interval [0,1].

Alvast bedankt,

Roland