Better model Joe wants to impress his boss He builds a regre

Better model? Joe wants to impress his boss. He builds a regression model to predict sales that has 20 predictors and an R2 of 80%. Sally builds a competing model with only 5 predictors, but an R2 of only 78%. Which model is likely to be most useful for understanding the drivers of sales? How could the boss tell? Explain.

Solution

If a model has too many predictors and higher order polynomials, it begins to model the random noise in the data. This condition is known as overfitting the model and it produces misleadingly high R-squared values and a lessened ability to make predictions.

therefore joe model was rejected because it has more predictors

Sally\'s competing model is accepted as it has only 5 predictors