EXAMPLE 11.25 Predicting Asking Price
homes04
CASE 11.3 Software tells us that the highest available increases as we increase the number of explanatory variables as follows:
| Variables | |
|---|---|
| 1 | 0.44 |
| 2 | 0.57 |
| 3 | 0.62 |
| 4 | 0.66 |
| 5 | 0.72 |
| ⋮ | |
| 13 | 0.77 |
Because of collinearity problems, models with 14 or all 15 explanatory variables cannot be used. The highest possible is 77%, using 13 explanatory variables.