Modifying Two-Parameter Ridge Liu Estimator Based on Ridge Estimation

Abstract

In this paper, we introduce the new biased estimator to deal with the problem of multicollinearity. This estimator is considered a modification of Two-Parameter Ridge-Liu estimator based on ridge estimation. Furthermore, the superiority of the new estimator than Ridge, Liu and Two-Parameter Ridge-Liu estimator were discussed. We used the mean squared error matrix (MSEM) criterion to verify the superiority of the new estimate. In addition to, we illustrated the performance of the new estimator at several factors through the simulation study.