3/25/2011

Interaction Regression Models - (see Figure 8.8 on p. 310)

• Additive model (no interaction)
• Reinforcement interaction effect
• Interference interaction effect

RStudio Exercise

• Modify Bodyfat.R to fit a model with all pairwise interaction terms and then use the partial F-test to see if any of the interaction terms are needed in the model.
  • Left side of the room - do not center the variables
  • Right side of the room - center the variables

Regression models with qualitative predictors

• Formal model
• Example with RStudio - see Firms.R
• Exercise - modify Firms.R to fit two separate regression lines and conduct formal hypothesis tests to see if two lines are better than one for predicting the number of months elapsed since the insurance innovation was introduced.

In class exercises

• 7.4, 7.13, 7.17, and 7.25

Please read Sections 8.3 through 8.6 for class on Monday.