You're performing a regression analysis on a dataset, and you notice that small changes in the data lead to significantly different parameter estimates. What could be the potential cause for this?
- Data leakage
- Low variance
- Multicollinearity
- Underfitting
This instability of parameter estimates is a typical symptom of multicollinearity. When predictors are highly correlated, it becomes hard for the model to determine the effect of each predictor independently, hence slight changes in data can lead to very different parameter estimates.
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