Ridge regression (Statistics)

This thesis demonstrates the theory and logic of the ridge
regression method of statistical estimation. The effect of
multicollinearity on ordinary least squares is explored,
and the optimality of the ridge estimators is derived. The
critical analyses of ridge regression that have been
developed in the biased estimation literature and by
Bayesian statisticians is discussed. The technique of
ridge regression is compared to ordinary least squares in
the context of estimating price and income elasticities for
Greek imports.