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"make better decisions" as making themselves richer and consumers poorer?
by Iwan-Zotow 8y ago
"make better decisions" as making themselves richer and consumers poorer?
- dan-robertson 8y agoIf you make bad decisions by offering loans at too low a rate, you will lose money on average and eventually go bankrupt. If you make bad decisions by offering loans at too high a rate because you have high overheads or you’re cautious or your actuaries are wrong or you’re racist then people won’t take out your loans because they get a better deal elsewhere or the loan is too expensive so you lose money by not profiting from making the loan. Now there’s a balance here: you want to be competitively priced so people will take out your loans but you also want higher margins so you can make more money for investors or expand or make less money in other places to attract customers. I think in this case “make better decisions” means either morally better (ie less racist), or better in the sense of “make better deals to win more customers to make more money”
- Iwan-Zotow 8y agoWhat kind of function ML is optimizing? Who specified that function? Lenders made their decision from the dawn of time, so we have some data to compare. Now (say, last year) they made decisions with help of ML - what changed? Who got a better deal?