When dummy variables are used to incorporate categorical information into a regression equation, it is standard procedure to use one less dummy variable than the number of categories considered. This ...

Regressions containing dummy variables are easily estimated by the familiar expedient of "dropping out" one of the categories but the result is often awkward to interpret. Since coefficients of dummy ...

A natural question: When the qualitative variable takes k categorical values, why don't we simply encode it with k "yes/no" variables? Conceptually, this would work. Practically, it fails inside the ...