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Business Data Science: Combining Machine Learning and Economics to Optimize, Automate, and Accelerate Business Decisions by Matt Taddy

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Classification

Many of the prediction questions that we face are classification questions. You might want to predict a website user’s intent among several options, a speaker’s political affiliation among a few parties, or the subject of an untagged image. These examples fit in our usual regression framework, where response y is a function of inputs x. The difference is that y now represents membership in a category: y ∊ {1, 2, . . ., m}. The prediction question is, given a new x, what is our best guess at the response category, ŷ?

Nearest Neighbors

We have already worked with two-category classification via logistic regression, where y ∊ {0, ...

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