Logistic_regression.pptx

# Logistic_regression.pptx - Logistic regression Dichotomous...

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Logistic regression

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Dichotomous dependent variable Consumer’s decision: buy – not buy Outcome of an investment: success – failure Diagnosis: healthy – sick Will the client pay the loan back?: yes – no Final result of a student: pass - fail AIM: prediction of the membership
Characteristics of a binary variable Values: 1 – belong to the category 0 – do not belong to the category Mean (relative frequency of the „preferred” outcomes) Variance 0;1 1 0 k n k k x p n n   2 2 2 0;1 1 0 1 k p n k p p p n

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Scattered plot How to fit any type of function to these point?
Probabilities of even 1 Calculate the average of Y (the probability of „success”) in every point of X

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Employee’s decision based on the offered salary
How does the model look like? Multiple regression models and the least squares criteria is unsufficient, because the dependent variable can not be normally distributed it is a non linear model values outside the range of 0-1 are unacceptable

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The logic of the model formulation P is the probability of success (event 1), but it can be only in the range of 0-1
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