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'Treated as zero to avoid probabilities being negative. "•"Treated as unity to avoid probabilities exceeding one. Y (1 — Yi).

'Treated as zero to avoid probabilities being negative. "•"Treated as unity to avoid probabilities exceeding one. Y (1 — Yi).

observations, from 40 to 28 in the present example.8 Omitting these observations, the WLS regression is

Yi 1 Xi

These results show that, compared with (15.12.10), the estimated standard errors are smaller and, correspondingly, the estimated t ratios (in absolute value) larger. But one should take this result with a grain of salt since in estimating (15.12.11) we had to drop 12 observations. Also, since wi are estimated, the usual statistical hypothesis-testing procedures are, strictly speaking, valid in the large samples (see Chapter 11).

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