Hello!
Within my Latent Class I have results for 2-group to 5-group segmentation. In literature, I found that you can make the segment selection based on the Consistent Akaike Info Criterion (CAIC). The lowest CAIC value from all groups should be the segmentation to select. However, it is logical that the more groups you have, the more 'precise' the customer segmentation. How do I prevent overfitting or know that I am overfitting?
For my research, the 5-group identification does not seem to make much sense so therefore I am asking.
Thank you!