Understand the Limitations and Pitfalls of Multiple Regression Analysis

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The Answer is Many factors affect the validity of the regression equation.Some of these factors are: (a)If an observation is atypical (called an "outlier"),it can be so influential as to actually change the regression line substantially.(b)When we extrapolate our regression equation to values not included in the range of data,we need to exercise caution,as the relationship may not hold outside the range.(c)When independent variables are highly correlated among themselves or when the relationship is not linear,the multiple regression analysis may provide misleading results.(d)When we use small samples or a large number of variables,we may obtain a sizable R² even when there is no relationship.

Understand the Limitations and Pitfalls of Multiple Regression Analysis

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