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Heuristics in Analytics: A Practical Perspective of What Influences Our Analytical World

Heuristics in Analytics: A Practical Perspective of What Influences Our Analytical World

Carlos Andre Reis Pinheiro, Fiona McNeill

ISBN: 978-1-118-42022-5

Jan 2014

256 pages



Employ heuristic adjustments for truly accurate analysis

Heuristics in Analytics presents an approach to analysis that accounts for the randomness of business and the competitive marketplace, creating a model that more accurately reflects the scenario at hand. With an emphasis on the importance of proper analytical tools, the book describes the analytical process from exploratory analysis through model developments, to deployments and possible outcomes. Beginning with an introduction to heuristic concepts, readers will find heuristics applied to statistics and probability, mathematics, stochastic, and artificial intelligence models, ending with the knowledge applications that solve business problems. Case studies illustrate the everyday application and implication of the techniques presented, while the heuristic approach is integrated into analytical modeling, graph analysis, text analytics, and more.

Robust analytics has become crucial in the corporate environment, and randomness plays an enormous role in business and the competitive marketplace. Failing to account for randomness can steer a model in an entirely wrong direction, negatively affecting the final outcome and potentially devastating the bottom line. Heuristics in Analytics describes how the heuristic characteristics of analysis can be overcome with problem design, math and statistics, helping readers to:

  • Realize just how random the world is, and how unplanned events can affect analysis
  • Integrate heuristic and analytical approaches to modeling and problem solving
  • Discover how graph analysis is applied in real-world scenarios around the globe
  • Apply analytical knowledge to customer behavior, insolvency prevention, fraud detection, and more
  • Understand how text analytics can be applied to increase the business knowledge

Every single factor, no matter how large or how small, must be taken into account when modeling a scenario or event—even the unknowns. The presence or absence of even a single detail can dramatically alter eventual outcomes. From raw data to final report, Heuristics in Analytics contains the information analysts need to improve accuracy, and ultimately, predictive, and descriptive power.

Preface xi

Acknowledgments xix

About the Authors xxiii

Chapter 1: Introduction 1

The Monty Hall Problem 5

Evolving Analytics 8

Summary 18

Chapter 2: Unplanned Events, Heuristics, and the Randomness in Our World 23

Heuristics Concepts 26

The Butterfly Effect 30

Random Walks 37

Summary 44

Chapter 3: The Heuristic Approach and Why We Use It 45

Heuristics in Computing 47

Heuristic Problem-Solving Methods 51

Genetic Algorithms: A Formal Heuristic Approach 54

Summary 67

Chapter 4: The Analytical Approach 69

Introduction to Analytical Modeling 71

The Competitive-Intelligence Cycle 74

Summary 97

Chapter 5: Knowledge Applications That Solve Business Problems 101

Customer Behavior Segmentation 102

Collection Models 106

Insolvency Prevention 113

Fraud-Propensity Models 120

Summary 127

Chapter 6: The Graph Analysis Approach 129

Introduction to Graph Analysis 130

Summary 143

Chapter 7: Graph Analysis Case Studies 147

Case Study: Identifying Influencers in Telecommunications 149

Case Study: Claim Validity Detection in Motor Insurance 162

Case Study: Fraud Identification in Mobile Operations 178

Summary 188

Chapter 8: Text Analytics 191

Text Analytics in the Competitive-Intelligence Cycle 193

Linguistic Models 198

Text-Mining Models 200

Summary 207

Bibliography 209

Index 217