An estimator that is preferable to OLS in the case of binary dependent variables would be one that constrains all values of the dependent variable to
A)be negative.
B)fall between 0 and 1.
C)equal 0.
D)equal 1.

Question

Quizplus · Accepted Answer

In the case of binary dependent variables, the dependent variable can take only two values, 0 or 1. So, an estimator that constrains all values of the dependent variable to fall between 0 and 1 would be preferable. This ensures that the estimated probabilities lie between the allowable range of values for a binary dependent variable.

An Estimator That Is Preferable to OLS in the Case