Binary Choice Models – STAT 351

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Assignment Requirements

Place all answers into a single document. Upload the document onto the Canvas homework page. Documents must be in one of the following formats: .doc, .docx, or .pdf. Data for completing these problems is found under the “Files/Homework/Homework 9” page on Canvas. Include all R code used to complete this assignment.

Binary Choice Models

Annabel, a retail analyst, has been following Under Armour, Inc., the pioneer in the compression-gear market. Compression garments are meant to keep moisture away from a wearer’s body during athletic activities in warm and cool weather. Annabel believes that the Under Armour brand attracts a younger customer, whereas the more established companies, Nike and Adidas, draw an older clientele. In order to test her belief, she collects data on the age of the customers and whether or not they purchased Under Armour (Purchase; 1 for purchase, 0 otherwise). The data can be found in the file UnderArmour.csv

  1. Fit a linear probability model predicting the probability that a person purchases Under Armour compression gear from their age. What is your model, and what R code did you use to run your model?
  2. From your model, predict the probability that a 20 year old purchases their compression wear from Under Armor. Predict the probability that a 30 year old purchases their compression wear from Under Armour.
  3. Predict the probability that a 60 year old purchases their compression wear from Under Armour. Does this answer make sense? Why or why not?
  4. Compute the prediction accuracy of your model. Give the R code used to compute your prediction accuracy
  5. Repeat parts 1, 2, and 4 for the logistic regression model.
  6. From your analysis, which model would you prefer when predicting the purchase of compression wear? Why?

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