Answer to Question #122762 in Statistics and Probability for Bob

Question

2. Suppose a researcher wanted to estimate people’s willingness to pay for public construction project. He
asked to i-th respondent that “Are you willing to pay Ai amount of tax for public construction project?”, and
the respondent would only say yes or no. Suppose people’s willingness to pay follows normal distribution
with mean μ and variance σ2 , derive likelihood function to estimate mean μ and variance σ2 based on the
responses(yes or no) of n respondents. (Hint: A respondent will accept an offer if his/her willingness to pay
is larger than the given amount of tax A) (20 points)

Answer 1

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