In estimating the linear probability model for whether an individual clicked through on an advertisement based off how much time the individual spent on the website, which of the following conditions must hold from the resulting regression (ClickThrough_i = β₀ + β₁TimeSpent_i + U_i)? A) The sum of the residuals will be zero. B) All the predictions will fall between 0 and 1. C) The estimate for β₁ will be negative. D) The estimate for β₀ will be positive.

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Quizplus · Accepted Answer

The sum of the residuals in a linear regression model, including a linear probability model, will always be zero due to the property of least squares estimation, which ensures that the line of best fit minimizes the sum of the squared differences between observed and predicted values.

In Estimating the Linear Probability Model for Whether an Individual