Suppose we write down the following model for the final price of iPod auctions o

Question

Suppose we write down the following model for the final price of iPod auctions on eBay:

1.Before you collect data and run a regression, what signs do you expect for each of the slope coefficients?

PRICE, = f0 +m . NEW, + 2 . SCRATCH-+ 3 . PERCENT, + /,-BIDRS, +e,, where PRICE,is the final price of auction i, NEW, is a dummy variable which equals one whern the iPod is new, SCRATCH, is a dummy variable which equals one if the iPod is scratched PERCENT, is the percentage of positive seller feedback and BIDRS, is the number of bidders in the auction i, Each of the following questions has four parts, referring to each of the slope coefficients: Bi, p2, 3, and corresponding to the variables NEW, SCRATCH, PERCENT,' and BlDRS!

Explanation / Answer

1) Signs expected:

New = Positive

Scratch = Negative

Percent = Positive

BIDRS = Positive

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