Abstract
This paper develops a probability model to evaluate the predictive validity of two-way classification schemes in the context of personal credit scoring and bank loan applications. The Bayesian decision model provides a structure for identifying classification rules that lead to optimal-maximum expected payoff or minimum expected cost-classifications. Using payoffs from multiple perspectives allows identifying conditions where the various perspectives produce contradictory classifications generating either profit premiums or cost penalties depending on the perspective.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
