General Studies · Econometrics
Assertion (A): In binary choice models (like Logit and Probit), only the relative magnitudes of the coefficients are identified rather than their absolute values. Reason (R): The variance of the underlying error term is normalized to a fixed value for identification purposes.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A is false but R is true
- 2A is true but R is false
- 3Both A and R are true but R is not the correct explanation of A
- 4Both A and R are true and R is the correct explanation of A✓
Correct answer
Both A and R are true and R is the correct explanation of A
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