Predictive Analytics For Dummies

Chapter 2

Predictive Analytics in the Wild

In This Chapter

Identifying some common use cases

Implementing recommender systems

Improving targeted marketing

Using predictive analytics for fraud prevention

Predictive analytics sounds like a fancy name, but we use much the same process naturally in our daily decision-making. Sometimes it happens so fast that most of us don't even recognize when we’re doing it. We call that process “intuition” or “gut instinct”: In essence, it’s quickly analyzing a situation to predict an outcome — and then making a decision.

When a new problem calls for decision-making, natural gut instinct works most like predictive analytics when you’ve already had some experience in solving a similar problem. Everyone relies on individual experience, and so solves the problem or handles the situation with different degrees of success.

You’d expect the person with the most experience to make the best decisions, on average, over the long run. In fact, that is the most likely outcome for simple problems with relatively few influencing factors. For more complex problems, ...