Multiple Linear Regression Analysis with Categorical Predictors is done using Indicator Variables. We have to clearly analyze all possible models and select the best fitting model.
Multiple Linear Regression
We use indicator variables when we have categorical variables in the Regression Equation. They are also known as Dummy Variables.
Multiple Linear Regression helps us to make predictions using two or more predictor variables. Concept of Multicollinearity is also very important in Regression Analysis.