Mean-Risk Trade-Offs in Inductive Expert Systems.

Author List: Mookerjee, Vijay S.; Mannino, Michael V.;
Information Systems Research, 2000, Volume 11, Issue 2, Page 137.
Notably absent in previous research on inductive expert systems is the study of mean-risk trade-offs. Such trade-offs may be significant when there are asymmetries such as unequal classification costs, and uncertainties in classification and information acquisition costs. The objective of this research is to develop models to evaluate mean-risk trade-offs in value-based inductive approaches. We develop a combined mean-risk measure and incorporate it into the Risk-Based induction algorithm. The mean-risk measure has desirable theoretical properties (consistency and separability) and is supported by empirical results on decision making under risk. Simulation results using the Risk-Based algorithm demonstrate: (i) an order of magnitude performance difference between mean-based and risk-based algorithms and (ii) an increase in the performance difference between these algorithms as either risk aversion, uncertainty, or asymmetry increases given modest thresholds of the other two factors.
Keywords: Inductive Expert Systems; Risk Aversion in Expert Systems; Value-Based System Design
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List of Topics

#209 0.263 results study research information studies relationship size variables previous variable examining dependent increases empirical variance accounting independent demonstrate important addition
#97 0.224 set approach algorithm optimal used develop results use simulation experiments algorithms demonstrate proposed optimization present analytical distribution selection number existing
#129 0.176 expert systems knowledge knowledge-based human intelligent experts paper problem acquisition base used expertise intelligence domain inductive rules machine artificial task
#215 0.128 data classification statistical regression mining models neural methods using analysis techniques performance predictive networks accuracy method variables prediction problem measure
#151 0.051 costs cost switching reduce transaction increase benefits time economic production transactions savings reduction impact services reduced affect expected optimal associated
#264 0.051 risk risks management associated managing financial appropriate losses expected future literature reduce loss approach alternative mitigate failures failure cause mitigation