In a regression model of student grades, we would code the nine categories of business courses taken (ACC, FIN, ECN, MGT, MKT, MIS, ORG, POM, QMM) by including nine binary (0 or 1) predictors in the regression.

Question

Quizplus · Accepted Answer

Including all nine binary predictors for the categories would introduce multicollinearity due to the dummy variable trap. Instead, one should include only eight binary predictors, using one category as a reference group.

In a Regression Model of Student Grades, We Would Code