Predictive Analytics and Data Mining

4.3. k-Nearest Neighbors

The predictive data mining using decision trees and rule induction techniques were built by generalizing the relationship within the data set and using it to predict the outcome of new unseen data. If we need to predict the loan interest rate based on credit score, income level, and loan amount, one approach is to develop a mathematical relationship such as an equation y = f(X) based on the known data and then using the equation to predict interest rate for new data points. These approaches are called eager learners because they attempt to find a best approximation of the actual relationship between the input and target variables. But there is also a simple alternative approach. We can “predict” the interest rate for a ...