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Dummy variables vs. category-wise models. (English) Zbl 07267721
Summary: Empirical research frequently involves regression analysis with binary categorical variables, which are traditionally handled through dummy explanatory variables. This paper argues that separate category-wise models may provide a more logical and comprehensive tool for analysing data with binary categories. Exploring different aspects of both methods, we contrast the two with a Monte Carlo simulation and an empirical example to provide a practical insight.

MSC:
62 Statistics
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