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As the title says, Does the linearregression() handle the dummy Variable trap by itself ? or do I need to program its solution implicitly? Also, does the dummy variable trap occurs with all datasets that include dummy variables ( for sure after encoding the categorical data in the dataset) or just in specific scenarios?

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I assume you are using sklearn's LinearRegression.

The answer is no:

The idea behind the dummy trap is if one column has labels [1,2 or 3], Then you only need two columns to represent the information as [0,0] , [0,1] or [1,0]. So yes it applies to all feature columns which get one-hot encoded.

This is not true if the target column was multi-label as dropping a label here would means a low prediction probability in one class would mean a high prediction of the another class but would completely ignore prediction of the third.

If you are creating the one-hot encoding on the features you will have to manually delete one for each multi-label column you had.

Easier yet is the get_dummies method (with drop_first = True)

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