As a business development manager for a car rental company, you are attempting to conduct a multilevel model of performance of sales people within and across four car showrooms in two different regions, but you keep facing the problem of multicollinearity. How might you solve this?
A) Grand mean centring
B) Group mean centring
C) Multilevel centring
D) Random centring

Question

Quizplus · Accepted Answer

Group mean centring is the best choice for dealing with multicollinearity in a multilevel model. This technique adjusts the predictor variables by subtracting the group mean from each observation, allowing for more accurate estimates of the coefficients and reducing the correlation between predictors. Grand mean centring only adjusts the intercept, while multilevel centring and random centring are not commonly used techniques for addressing multicollinearity.

As a Business Development Manager for a Car Rental Company