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LT-2

Course: DM 301, Spring 2011
School: American
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NO.2 Topics CHAPTER to be covered in this chapter Data vs information Data mining and machine learning Structural descriptions Rules: classification and association Decision trees Datasets Weather, contact lens, CPU performance, labour negotiation data, soybean classification Fielded applications Loan applications, screening images, market basket analysis Generalization as search Data mining and...

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NO.2 Topics CHAPTER to be covered in this chapter Data vs information Data mining and machine learning Structural descriptions Rules: classification and association Decision trees Datasets Weather, contact lens, CPU performance, labour negotiation data, soybean classification Fielded applications Loan applications, screening images, market basket analysis Generalization as search Data mining and ethics 2 1 Data vs. information Society produces huge amounts of data Sources: business, science, medicine, economics, geography, environment, sports, Potentially valuable resource Raw data is useless: need techniques to automatically extract information from it Data: recorded facts Information: patterns underlying the data 3 Data mining Extracting previously unknown, potentially useful information from data Needed: programs that detect patterns and regularities in the data Strong patterns good predictions Problem 1: most patterns are not interesting Problem 2: patterns may be inexact (or spurious) Problem 3: data may be garbled or missing 4 2 The weather problem Temp Humidity Overcast Outlook 72 90 Overcast 83 Overcast 64 Overcast Windy Class TRUE Play 78 FALSE Play 65 TRUE Play 81 75 FALSE Play Rain 71 80 TRUE Dont play Rain 65 70 TRUE Dont play Rain 75 80 FALSE Play Rain 68 80 FALSE Play Rain 70 96 FALSE Play Sunny 75 70 TRUE Play Sunny 80 90 TRUE Dont play Sunny 85 85 FALSE Dont play Sunny 72 95 FALSE Dont play Sunny 69 70 FALSE Play 5 Ross Quinlan Machine learning researcher from 1970s University of Sydney, Australia 1986 Induction of decision trees ML Journal 1993 C4.5: Programs for machine learning Published by Morgan Kaufmann 6 3 Classification vs. association rules Classification rule: predicts value of a given attribute (the classification of an example) If outlook = sunny and humidity = high then play = no Association rule: predicts value of arbitrary attribute (or combination) If temperature = cool then humidity = normal If humidity = normal and windy = false then play = yes If outlook = sunny and play = no then humidity = high If windy = false and play = no then outlook = sunny and humidity = high 7 Weather data with mixed attributes Some attributes have numeric values Outlook Temperature Humidity Windy Play Sunny 85 85 False No Sunny 80 90 True No Overcast 83 86 False Yes Rainy 75 80 False Yes If If If If If outlook = sunny and humidity > 83 then play = no outlook = rainy and windy = true then play = no outlook = overcast then play = yes humidity < 85 then play = yes none of the above then play = yes 8 4 Fielded applications The result of learning or the learning method itself is deployed in practical applications Processing loan applications Screening images for oil slicks Electricity supply forecasting Diagnosis of machine faults Marketing and sales 9 Processing loan applications (American Express) Given: questionnaire with financial and personal information Question: should money be lent? Simple statistical method covers 90% of cases Borderline cases referred to loan officers But: 50% of accepted borderline cases defaulted! Solution: reject all borderline cases? No! Borderline cases are most active customers 10 5 Enter machine learning 1000 training examples of borderline cases 20 attributes: age years with current employer years at current address years with the bank other credit cards possessed, Learned rules: correct on 70% of cases human experts only 50% Rules could be used to explain decisions to customers 11 Screening images Given: radar satellite images of coastal waters Problem: detect oil slicks in those images Oil slicks appear as dark regions with changing size and shape Not easy: look alike dark regions can be caused by weather conditions (e.g. high wind) Expensive process requiring highly trained personnel 12 6 Enter machine learning Extract dark regions from normalized image Attributes: size of region shape, area intensity sharpness and jaggedness of boundaries proximity of other regions info about background Constraints: Few training examplesoil slicks are rare! Unbalanced data: most dark regions arent slicks Regions from same image form a batch Requirement: adjustable false-alarm rate 13 Load forecasting supply Electricity companies need forecast of future demand for power Forecasts of min/max load for each hour significant savings Given: manually constructed load model that assumes normal climatic conditions Problem: adjust for weather conditions Static model consist of: base load for the year load periodicity over the year effect of holidays 14 7 Enter machine learning Prediction corrected using most similar days Attributes: temperature humidity wind speed cloud cover readings plus difference between actual load and predicted load Average difference among three most similar days added to static model Linear regression coefficients form attribute weights in similarity function 15 Marketing and sales Companies precisely record massive amounts of marketing and sales data Applications: Special offers: identifying profitable customers (e.g. reliable owners of credit cards that need extra money during the holiday season) 16 8 Marketing and sales Market basket analysis Association techniques find groups of items that tend to occur together in a transaction (used to analyze checkout data) Historical analysis of purchasing patterns Identifying prospective customers Focusing promotional mailouts (targeted campaigns are cheaper than mass-marketed ones) 17 Machine learning and statistics Historical difference (grossly oversimplified): Statistics: testing hypotheses Machine learning: finding the right hypothesis But: huge overlap Decision trees (C4.5 and CART) Today: perspectives have converged Most ML algorithms employ statistical techniques 18 9 Statisticians Sir Ronald Aylmer Fisher Born: 17 Feb 1890 London, England Died: 29 July 1962 Adelaide, Australia Numerous distinguished contributions to developing the theory and application of statistics for making quantitative a vast field of biology Leo Breiman Developed decision trees 1984 Classification and Regression Trees. Wadsworth. 19 Overfitting-avoidance bias Can be seen as a form of search bias Modified evaluation criterion E.g. balancing simplicity and number of errors Modified search strategy E.g. pruning (simplifying a description) Pre-pruning: stops at a simple description before search proceeds to an overly complex one Post-pruning: generates a complex description first and simplifies it afterwards 20 10 Data mining and ethics It is widely accepted that before people make a decision to provide personal information they need to know how it will be used and what it will be used for, what steps will be taken to protect its confidentiality and integrity, what the consequences of supplying or withholding the information are, and any rights of redress they may have. Whenever such information is collected, individuals should be told these straightforwardly in plain language they can understand. 21 Data mining and ethics The potential use of data mining techniques means that the ways in which a repository of data can be used may stretch far beyond what was conceived when the data was originally collected. This creates a serious problem: it is necessary to determine the conditions under which the data was collected and for what purposes it may be used. Does the ownership of data bestow the right to use it in ways other than those purported when it was originally recorded? Clearly in the case of explicitly collected personal data it does not. But in general the situation is complex. 22 11 Data mining and ethics Ethical issues arise in practical applications Data mining often used to discriminate E.g. loan applications: using some information (e.g. sex, religion, race) is unethical Ethical situation depends on application E.g. same information ok in medical application Attributes may contain problematic information E.g. area code may correlate with race 23 Data mining and ethics Important questions: Who is permitted access to the data? For what purpose was the data collected? What kind of conclusions can be legitimately drawn from it? Caveats must be attached to results Are resources put to good use? 24 12 First Assignment; Marks=5 Write a comprehensive essay on Introduction to Data Mining, its importance and practical applications, achievements in various sectors by 17.10.2011. Four pages A-4 size, margin 1 from top, bottom, left and right. Font Time New Roman size 12. Only hard copy will be accepted. 25 THANK YOU 13
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City University of Hong Kong - FINANCE - EF4320
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