How to Deal with Categorical Variables that Allow Selection of Multiple Values per Observation? Say you are dealing with a movie database that has movies and their genres. Genre is a categorical variable but each movie can belong to more than one genre. 
For example, Movie A may be Comedy and Romance, Movie B is Romance and Action and Movie C is Comedy.
How would you encode these categories for analysis? Normally, dummy variable encoding involves a categorical variable where each observation belongs to only one of the possible values.
My idea is to add new variables for each of the different genres and then 1/0 code each movie for whether they belong to it or not. However, would this then be suitable for linear regression?
 A: Partially answered in comments, a summary:
You have a good idea, basically, but also other ideas can be tried.

You might however consider a model in which movies that belong to many
  categories have the effects of each category count less strong. For
  instance if the categories comedy, romance, drama have a certain
  similar (positive/negative) effect size than this should probably not
  be tripled for movies that happen to belong to all three
  categories.This is especially important if movies have been
  categorised with different 'intensity' of number of categories.

– Martijn Weterings
But how? Let the number of genres marked for a film be $k$.  Then using a linear model with 
$$ \DeclareMathOperator{\E}{\mathbb{E}}
\E Y=\mu =\beta_0+\beta_A x_A + \beta_B X_B + \dotsm
$$
and $x_A, x_B, \dotsc$ being the indicators for genres $A,B,\dotsc$ and $k=x_A+x_B+\dotsm$ then we could replace the model above with
$$ 
\E Y=\mu =\beta_0+\beta_A x_A/k + \beta_B X_B/k + \dotsm
$$ maybe, that is, replace the 0,1 indicators with $0,1/k$ indicators. Maybe you could also include $k$ (or some function of it) as a covariable. You could also try to estimate the effect of $k$, but that could lead to a nonlinear model. I would try out various possibilities. 
Then another advice was

No problem, recommender systems can deal with this. How many genres do
  you have in total?

– DeltaIV
