Modeling

In a good model, errors are reduced, and overfitting is avoided. Indicators to assess the model itself are also known. 

  1. The accuracy of the model is how much the estimated value differs from the true value, usually expressed as R².

  2. Recently, AIC and BIC have also been used to take generalization performance into account.

    • These two are often used to assess model fitting, but the BIC contains a sample size component. As the sample size increases, the influence of sample size becomes dominant in the BIC values.

  3. We also use threshold-by-threshold Bayesian probabilities from a business perspective.