Question about likelihood ratio test and nested models
On Mon, 10 Jan 2011, Xiao He wrote:
Now, I pool level2 and level3 together to form level2_3, hence resulting in a new fixed predictor IV_NEW that has only two levels: level1 and level2_3. My question then is: is the new model (M2, shown below) considered to be nested within the model shown above (M1)? And can I use likelihood ratio test to compare M1 and M2?
Sure. Consider it rather as testing d3=0, in Intercept + d23 + d3 I d23 d3 1 0 0 1 1 0 1 1 1
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