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Different levels of interaction

Once you have three explanatory variables, the number of options for specifying interactions increases. You can specify no interactions. You can specify 2-way interactions, which gives you model coefficients for each pair of variables. The third option is to specify all the interactions, which means the three 2-way interactions and the interaction between all three explanatory variables.

As the number of explanatory variables increases further, the number of interaction possibilities rapidly increases.

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Intermediate Regression with statsmodels in Python

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Interaktive Übung

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# Model price vs. no. of conv. stores, sqrt dist. to MRT station & house age, no global intercept, no interactions
mdl_price_vs_all_no_inter = ____

# See the result
print(mdl_price_vs_all_no_inter.params)
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