What is m the size of your hypothesis set

Assignment Help Management Information Sys

Reference no: EM131293443

In our credit card example, the bank starts with some vague idea of what constitutes a good credit risk. So, as customers x₁, x₂, ... , X_N arrive, the bank applies its vague idea to approve credit cards for some of these customers. Then, only those who got credit cards are monitored to see if they default or not. For simplicity, suppose that the first N customers were given cred it cards. Now that the bank knows the behavior of these customers, it comes to you to improve their algorithm for approving credit. The bank gives you the data (x₁, y₁), ... ' (x_N , Y_N). Before you look at the data, you do mathematical derivations and come up with a credit approval function. You now test it on the data and, to your delight, obtain perfect prediction.

(a) What is M, the size of your hypothesis set?

(b) With such an M, what does the Hoeffding bound say about the probability that the true performance is worse than 2% error for N = 10000?

(c) You give your g to the bank and assure them that the performance will be better than 2% error and your confidence is given by your answer to part (b). The bank is thrilled and uses your g to approve credit for new clients. To their dismay, more than half their credit cards are being defaulted on. Explain the possible reason(s) behind this outcome.

(d) Is there a way in which the bank could use your credit approval function to have your probabilistic guarantee? How?

Reference no: EM131293443

Questions Cloud

Develop a critical and robust and comprehensive plan : Evaluate a business opportunity and develop a critical, robust and comprehensive plan that seeks to develop and exploit the opportunity identified.

Analyze the internal capabilities and weaknesses of company : Analyze the internal capabilities and weaknesses of the company. Analyze and evaluate the company's current competitive strategies?

Managing telecommunications software engineering : Using the algorithms, programming languages, managing telecommunications software engineering, managing corporate information resources, and managing partnership-based information technology (IT) operations topics covered in this unit, discussion ..

Why was the art produced by the ashcan school different : How and why was the art produced by the Ashcan School different from that of the Gilded Age? To what changes in social history were artists reacting?

What is m the size of your hypothesis set : What is M, the size of your hypothesis set?- Is there a way in which the bank could use your credit approval function to have your probabilistic guarantee? How?

Discuss the implications or outcomes : Intellectual property (IP) cases and legal issues are continuously discussed in the media. Locate an article on the Internet related to copyright infringement, then discuss the implications or outcomes.

Explain identification of the specific social responsibility : Identification of the specific social responsibility and ethical factors relevant to the issue, along with application of the key ethical theories to the facts of this case.

Build a trading strategy that buys when the stocks go down : How can you test your strategy so that its performance in sample is more reflective of what you should expect in reality?

Critically analyse your own organisation : You are required to critically analyse your own organisation OR other organisation that you are familiar with from an Organizational Behaviour perspective. Focus your analysis on a critical problem or issue(s) the organisation is facing.

User Account

All Pages