Akaike’s Information Criterion (AIC)

PrepNuggets

LEVEL II

AIC = nxln(SSE/n) + 2(k+1)

n: number of observations, k: number of parameters

AIC is a measure of how well the model is able to make accurate prediction, taking into account the complexity of the model. A lower AIC value indicates a better predictor, as it suggests that the model is able to accurately predict the dependent variable with a lower number of parameters.

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