The Unpredictability of Standard Back Propagation Neural Networks in Classification Applications

Abstract

This note offers an extension of Tam and Kiang (Tam, K. Y., M. Y. Kiang. 1992. Management applications of neural networks: The case of bank failure predictions. Management Sci. 38(7) 926–947.). First the weakness of the standard back propagation neural network learning algorithm is discussed, and then a warning is issued regarding applications of artificial neural networks in the management science field. Also suggested is a possible way of improving the performance of neural networks in managerial applications.