Please work in groups of 3 or 4 and turn in one set of solutions per group.

1. Write a detailed summary of the estimation process for Nevo's random coefficients discrete choice model. Explain the function of each line in Nevo's code.

2. Run Nevo's code and report the estimation results. Interpret the results.

3. Run an alternative specification. This time use a simple logit model instead of the random coefficients model. This is most easily done by slightly altering Nevo's code. Report the new estimation results. Compare the results from the random coefficients version to the results from the simple logit version. Are there any benefits to utilizing a full random coefficients model?

4. Use OLS.

5. Use IV.

6. Try changing the data.