Inducing Rules for Expert System Development: An Example Using Default and Bankruptcy Data

The results of experiments designed to assess the effectiveness of an inductive algorithm in discovering predictive knowledge structures in financial data show that for all cases tested, the inductively produced knowledge structures perform better than the competing models.

Abstract

With rapidly growing interest in the development of knowledge-based computer consulting systems for various problem domains, the difficulties associated with knowledge acquisition have special importance. This paper reports on the results of experiments designed to assess the effectiveness of an inductive algorithm in discovering predictive knowledge structures in financial data. The quality of the results are evaluated by comparing them to results generated by discriminant analysis, individual judgments, and group judgments. A partial intersection of predictive attributes occurs. More importantly, for all cases tested, the inductively produced knowledge structures perform better than the competing models.