CHAID

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CHAID
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Example Opening of Cinema/ Childrens
Park/Exhibition Center

• To find consumer responses to opening of Cinema,
  Childrens park or Exhibition
• 903 respondents were asked to rate each
  alternative on a 5 point scale 1(v.low) to 5
  (v.high)
• The analyst also collected demographic data on
  the respondents

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Example Opening of Cinema/ Childrens
Park/Exhibition Center

• Dependent var - of positive responses
• Indep variables (with coding in parenthesis)
• Gender Male (1), Female (2)
• Age 16-20 (1)
• 21-24 (2)
• 25-34 (3)
• 35-44 (4)
• 45-54 (5)
• 55-64 (6)
• 65 (7)
• Socio-economic group had 6 categoriesA(1),
  B(2), C1(3), C2(4) etc

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Chi-Squared Automatic Interaction Detection(CHAID)

• CHAID is a dependence method.
• For given dep var. we want technique that can
• 1. Indicate indep. var. that most affect dep.
  var.
• 2. Identify mkt. segments that differ most on
  these important. indep. var.
• Early interaction detection method is AID
• AID employs hierarchical binary splitting
  algorithm

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CHAID

• General procedure
• 1. First select indep. var. whose subgroups
  differ most w.r.t dep. var.
• 2. Each subgroup of this var. is further
  divided into subgroups on remaining variables
• 3. These subgroups are tested for differences
  on dep. var.
• 4. Var. with greatest difference is selected
  next
• 5. Continue until subgroups are too small

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Automatic Interaction Detection AID

• Brief description of AID
• 1. Designate dep. and indep. Variables
• 2. Each indep. var. divided into categories
• 3. Split population into 2 groups on
  bestindep. var.
• 4. Further dichotomize each of these groups
  successively
• 5. Continue splitting each resulting subgroups
  until no indep. var. meets selection criteria

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AID

• Limitations of AID
• 1. Not a classical statistical model
• 2. Hypothesis and inference tests not possible
• 3. Multivariable not multivariate procedure. All
  variables are not considered simultaneously
• 4. Does not adjust for fact that there are many
  ways to dichotomize indep. variable

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CHAID

• CHAID is more flexible than AID
• Advantages of CHAID over AID
• 1. All var. dep. or indep. can be categorical
• 2. CHAID selects indep. var. using Chi- square
  test.
• 3. CHAID not restricted to binary splits
• 4. Solves problem of simultaneous inference
  using Bonferroni multiplier
• 5. Automatically tests for and merges pairs
  of homogenous categories in indep. var.

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CHAID

• CHAID distinguishes 3 types of indep. variables
• - Monotonic
• - Free
• - Floating
• Basic components of CHAID analysis
• 1. A categorical dep. var.
• 2. A set of categorical indep. variables
• 3. Settings for various CHAID parameters
• 4. Analyze subgroups and identify best indep.
  var.