Book Image

Machine Learning for Finance

By : Jannes Klaas
Book Image

Machine Learning for Finance

By: Jannes Klaas

Overview of this book

Machine Learning for Finance explores new advances in machine learning and shows how they can be applied across the financial sector, including insurance, transactions, and lending. This book explains the concepts and algorithms behind the main machine learning techniques and provides example Python code for implementing the models yourself. The book is based on Jannes Klaas’ experience of running machine learning training courses for financial professionals. Rather than providing ready-made financial algorithms, the book focuses on advanced machine learning concepts and ideas that can be applied in a wide variety of ways. The book systematically explains how machine learning works on structured data, text, images, and time series. You'll cover generative adversarial learning, reinforcement learning, debugging, and launching machine learning products. Later chapters will discuss how to fight bias in machine learning. The book ends with an exploration of Bayesian inference and probabilistic programming.
Table of Contents (15 chapters)
Machine Learning for Finance
Contributors
Preface
Other Books You May Enjoy
Index

Unfairness as complex system failure


In this chapter, you have been equipped with an arsenal of technical tools to make machine learning models fairer. However, a model does not operate in a vacuum. Models are embedded in complex socio-technical systems. There are humans developing and monitoring the model, sourcing the data and creating the rules for what to do with the model output. There are also other machines in place, producing data or using outputs from the model. Different players might try to game the system in different ways.

Unfairness is equally complex. We've already discussed the two general definitions of unfairness, disparate impact and disparate treatment. Disparate treatment can occur against any combination of features (age, gender, race, nationality, income, and so on), often in complex and non-linear ways. This section examines Richard Cook's 1998 paper, How complex systems fail - available at https://web.mit.edu/2.75/resources/random/How%20Complex%20Systems%20Fail.pdf...