The major flaw of the linear probability model is that
A)the actuals can only be 0 and 1,but the predicted are almost always different from that.
B)the regression R2 cannot be used as a measure of fit.
C)people do not always make clear-cut decisions.
D)the predicted values can lie above 1 and below 0.

Question

Quizplus · Accepted Answer

The major flaw of the linear probability model is that the predicted values can lie above 1 and below 0. This violates the probability framework, as probabilities cannot be outside the range of 0 to 1.

The Major Flaw of the Linear Probability Model Is That