INTRODUCTION TO ECONOMETRICS II ECO 306 NOUN 138 5.2.4.0 SUMMARY In this unit, we started with the linear probability model being the simplest binary choice model where the probability of the event occurring is assumed to be a linear function of a set of descriptive variables. We then proceeded to goodness of fit and statistical tests using maximum likelihood estimation as a method of estimating the parameters of a model given observations, by finding the parameter values that maximise the likelihood of making the observations given the parameters.
