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It’s almost as if it’s impossible to rationalize irrational behavior. No amount of machine learning or artificial intelligence can change that.

chongli 9y ago
In the context of data collection and prediction, what does it mean to be irrational? Truly random? Do people actually behave in truly random ways? Or are they predictable?
- AznHisoka 9y ago
  One can be predictable and irrational at the same time
- OkGoDoIt 9y ago
  In theory you’d want the algorithm to determine how rational someone is likely to be, assuming that is correlated with debt repayment. If you can say with some degree of confidence that a person is likely to act irrationally and that people who act irrationally don’t pay back debt as often, then that’s a signal to consider when deciding to lend. Not sure exactly how you’d determine that but I guess the hope of collecting such varied data points as phone battery level, typing speed, and food delivery preferences are meant to provide some amount of signal there.
  - chongli 9y ago
    What do rational/irrational mean, quantitatively speaking? Before we even write the algorithm, we've got to come up with a formal definition and I can't even begin to think about how you would do that.
galeaspablo 9y ago
Future behavior isn’t entirely predictable by past behavior. Sure. External events might put a particular individual in arrears, even though she/he has never defaulted in her/his life. Machine learning however, can use past behavior to make an educated guess, regarding how/when/if an individual will repay and/or how vulnerable said individual is to unforeseen external events. Machine learning might not be able to go as deep as evaluating someone’s chances of getting hit by lightning, for the purposes of credit ratings. However it does figure out if an individual has the chance to get out of sticky situations. Summarizing, it’s not about predicting irrational behavior. It’s about using past behavior to make a better educated guess than was possible before.

chongli 9y ago

In the context of data collection and prediction, what does it mean to be irrational? Truly random? Do people actually behave in truly random ways? Or are they predictable?

AznHisoka 9y ago
One can be predictable and irrational at the same time
OkGoDoIt 9y ago
In theory you’d want the algorithm to determine how rational someone is likely to be, assuming that is correlated with debt repayment. If you can say with some degree of confidence that a person is likely to act irrationally and that people who act irrationally don’t pay back debt as often, then that’s a signal to consider when deciding to lend. Not sure exactly how you’d determine that but I guess the hope of collecting such varied data points as phone battery level, typing speed, and food delivery preferences are meant to provide some amount of signal there.
- chongli 9y ago
  What do rational/irrational mean, quantitatively speaking? Before we even write the algorithm, we've got to come up with a formal definition and I can't even begin to think about how you would do that.

galeaspablo 9y ago

Future behavior isn’t entirely predictable by past behavior. Sure. External events might put a particular individual in arrears, even though she/he has never defaulted in her/his life. Machine learning however, can use past behavior to make an educated guess, regarding how/when/if an individual will repay and/or how vulnerable said individual is to unforeseen external events. Machine learning might not be able to go as deep as evaluating someone’s chances of getting hit by lightning, for the purposes of credit ratings. However it does figure out if an individual has the chance to get out of sticky situations. Summarizing, it’s not about predicting irrational behavior. It’s about using past behavior to make a better educated guess than was possible before.