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stat.ML updates on arXiv.org

Adaptive multi-fidelity optimization with fast learning rates Enhancing AI and Dynamical Subseasonal Forecasts with Probabilistic Bias Correction Sample Complexity Bounds for Stochastic Shortest Path with a Generative Model The Harder Path: Last Iterate Convergence for Uncoupled Learning in Zero-Sum Games with Bandit Feedback Stylistic-STORM (ST-STORM) : Perceiving the Semantic Nature of Appearance Collective Kernel EFT for Pre-activation ResNets PRIM-cipal components analysis One-Shot Generative Flows: Existence and Obstructions Structural interpretability in SVMs with truncated orthogonal polynomial kernels Amortized Optimal Transport from Sliced Potentials MinShap: A Modified Shapley Value Approach for Feature Selection Unsupervised feature selection using Bayesian Tucker decomposition Multi-User mmWave Beam and Rate Adaptation via Combinatorial Satisficing Bandits Best of both worlds: Stochastic & adversarial best-arm identification Scalable Model-Based Clustering with Sequential Monte Carlo Expert-Guided Class-Conditional Goodness-of-Fit Scores for Interpretable Classification with Informative Missingness: An Application to Seismic Monitoring Lightweight Geometric Adaptation for Training Physics-Informed Neural Networks Gating Enables Curvature: A Geometric Expressivity Gap in Attention Zeroth-Order Optimization at the Edge of Stability Differentially Private Conformal Prediction CLion: Efficient Cautious Lion Optimizer with Enhanced Generalization Generative Augmented Inference Improving Machine Learning Performance with Synthetic Augmentation PAC-MCTS: Bias-Aware Pruning for Robust LLM-Guided Search and Planning Path-Sampled Integrated Gradients Heat and Matérn Kernels on Matchings Doubly Outlier-Robust Online Infinite Hidden Markov Model Momentum Further Constrains Sharpness at the Edge of Stochastic Stability Multistage Conditional Compositional Optimization BOAT: Navigating the Sea of In Silico Predictors for Antibody Design via Multi-Objective Bayesian Optimization
Crowd, Lending, Machine, and Bias
Runshan Fu, Yan Huang, Param Vir Singh · 2020-07-20 · via stat.ML updates on arXiv.org

Big data and machine learning (ML) algorithms are key drivers of many fintech innovations. While it may be obvious that replacing humans with machine would increase efficiency, it is not clear whether and where machines can make better decisions than humans. We answer this question in the context of crowd lending, where decisions are traditionally made by a crowd of investors. Using data from Prosper.com, we show that a reasonably sophisticated ML algorithm predicts listing default probability more accurately than crowd investors. The dominance of the machine over the crowd is more pronounced for highly risky listings. We then use the machine to make investment decisions, and find that the machine benefits not only the lenders but also the borrowers. When machine prediction is used to select loans, it leads to a higher rate of return for investors and more funding opportunities for borrowers with few alternative funding options. We also find suggestive evidence that the machine is biased in gender and race even when it does not use gender and race information as input. We propose a general and effective "debasing" method that can be applied to any prediction focused ML applications, and demonstrate its use in our context. We show that the debiased ML algorithm, which suffers from lower prediction accuracy, still leads to better investment decisions compared with the crowd. These results indicate that ML can help crowd lending platforms better fulfill the promise of providing access to financial resources to otherwise underserved individuals and ensure fairness in the allocation of these resources.