A marketing manager fit customer purchase data to a logistic regression model, leading to the following estimation result: Pr[y, = 1] = logit(-1.931 + 0.00001 x income; + 0.141 x freq, + 0.183 x nmail), where y, denotes whether customer i buy our product in the next year (y; = 1) or not (y; = 0), income; is the amount of customer i's income (in dollars) during the current year, freq, is the number of purchases made by customer i in the current year, and nmail; is the number of flyers that customer i will receive in the next year. Which of the following statements is NOT correct?

MATLAB: An Introduction with Applications
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Author:Amos Gilat
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Which of the following is NOT CORRECT?

A) The past purchase frequency (freqi) affects the purchase probability positively – i.e., customers with high past purchase frequency are more likely to purchase our product in the next year than those with low past purchase frequency.

B) In general, customers are likely to buy our product because the baseline parameter is negative.

C) High-income customers are more likely to purchase our product in the next year than low- income customers because the coefficient corresponding to the income variable (incomei) is positive.

D) Although the number of flyers (nmaili) positively affects the purchase probability, it is not guaranteed that sending flyers to customers as many as possible maximizes profits.

 

A marketing manager fitted customer purchase data to a logistic regression model, leading to the following estimation result:

\[ \text{Pr}[y_i = 1] = \text{logit}(-1.931 + 0.00001 \times \text{income}_i + 0.141 \times \text{freq}_i + 0.183 \times \text{nmail}_i), \]

where \( y_i \) denotes whether customer \( i \) will buy our product in the next year (\( y_i = 1 \)) or not (\( y_i = 0 \)); \(\text{income}_i\) is the amount of customer \( i \)’s income (in dollars) during the current year, \(\text{freq}_i\) is the number of purchases made by customer \( i \) in the current year, and \(\text{nmail}_i\) is the number of flyers that customer \( i \) will receive in the next year. Which of the following statements is NOT correct?
Transcribed Image Text:A marketing manager fitted customer purchase data to a logistic regression model, leading to the following estimation result: \[ \text{Pr}[y_i = 1] = \text{logit}(-1.931 + 0.00001 \times \text{income}_i + 0.141 \times \text{freq}_i + 0.183 \times \text{nmail}_i), \] where \( y_i \) denotes whether customer \( i \) will buy our product in the next year (\( y_i = 1 \)) or not (\( y_i = 0 \)); \(\text{income}_i\) is the amount of customer \( i \)’s income (in dollars) during the current year, \(\text{freq}_i\) is the number of purchases made by customer \( i \) in the current year, and \(\text{nmail}_i\) is the number of flyers that customer \( i \) will receive in the next year. Which of the following statements is NOT correct?
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