Using data from 1,609 matches, a researcher estimates the following relationship by OLS: h_draw; = a + ßip_draw; + Ui In this case, h draw = 1 if the home team draws the match and = 0 otherwise; and the variable ip_draw is the gambling company's implicit predicted probability of a draw for the match. The researcher wishes to test the following hypothesis using the above model: Ho: a = 0 and ß = 1 The following OLS estimates are obtained (with standard errors reported in parentheses): h_draw,= -0.031 + 1.027ip_drawi (0.061) (0.238) The F-test value for the above hypothesis is given by F(2,1607) = 2.76 and the critical value at the 5% level of significance is 3.0. Explain the proposition under test here? What do you conclude and does your finding come as a surprise? Explain your answer.

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Using data from 1,609 matches, a researcher estimates the following relationship by OLS:
h_draw; = a + ßip_draw; + Ui
In this case, hdraw = 1 if the home team draws the match and = 0 otherwise; and the variable ip_draw
is the gambling company's implicit predicted probability of a draw for the match. The researcher
wishes to test the following hypothesis using the above model:
Ho: α = 0 and ß = 1
The following OLS estimates are obtained (with standard errors reported in parentheses):
h_draw,= -0.031 + 1.027ip_drawi
(0.061) (0.238)
The F-test value for the above hypothesis is given by F(2,1607) = 2.76 and the critical value at the 5%
level of significance is 3.0. Explain the proposition under test here? What do you conclude and does
your finding come as a surprise? Explain your answer.
Transcribed Image Text:Using data from 1,609 matches, a researcher estimates the following relationship by OLS: h_draw; = a + ßip_draw; + Ui In this case, hdraw = 1 if the home team draws the match and = 0 otherwise; and the variable ip_draw is the gambling company's implicit predicted probability of a draw for the match. The researcher wishes to test the following hypothesis using the above model: Ho: α = 0 and ß = 1 The following OLS estimates are obtained (with standard errors reported in parentheses): h_draw,= -0.031 + 1.027ip_drawi (0.061) (0.238) The F-test value for the above hypothesis is given by F(2,1607) = 2.76 and the critical value at the 5% level of significance is 3.0. Explain the proposition under test here? What do you conclude and does your finding come as a surprise? Explain your answer.
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