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Simple Linear Regression

Simple Linear Regression. NFL Point Spreads – 2007. Background. Las Vegas Bookmakers provide a point spread for each game The spread reflects how many points the home team “gets” from the visiting team (negative values mean the home team “gives” points to visitor)

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Simple Linear Regression

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  1. Simple Linear Regression NFL Point Spreads – 2007

  2. Background • Las Vegas Bookmakers provide a point spread for each game • The spread reflects how many points the home team “gets” from the visiting team (negative values mean the home team “gives” points to visitor) • If bookmakers are accurate, on average the actual difference should equal prediction • Accurate ? How variable ?

  3. Statistical model

  4. Summary Statistics / Regression Equation

  5. Testing normality of errors (I)

  6. Testing normality of errors (Ii)

  7. Example – NFL Spread errors

  8. Testing accuracy in mean • H0: b0 = 0, b1 = 1 • HA: b0≠ 0 and/or b1≠ 1 • Fit Model UnDer H0: Y*=X • Obtain error sum of squares under Y* • Compare with error sum of squares from full model (HA).

  9. Testing for Accuracy

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