Intro to Probability for Business
Adjusted R-squared is a statistical measure that evaluates the goodness of fit of a regression model while adjusting for the number of predictors used. Unlike regular R-squared, which can artificially inflate with additional variables, adjusted R-squared provides a more accurate assessment of how well the model explains variability in the dependent variable, particularly when comparing models with different numbers of predictors. This makes it particularly useful for model selection and validation, ensuring that added complexity leads to meaningful improvement in predictive power.
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