Free content from Analytic Focus
Examining one bank loan can’t disclose structural
discrimination by a lender. After a toxic groundwater
spill, the sale price of one house can’t be used to find
diminution in value for the area adjacent to the spill. The
losses get swallowed up in the variation inherent in the
activity. In the same way, there are forms of insurance
fraud, bid collusion, and similar illegal activity that can only
be discovered through pattern recognition and the use of
artificial intelligence. Tools available for finding patterns are
now available because of increasingly muscular computers
and the concomitant rise in mathematical algorithms taking
advantage of this new power. In this paper, I give examples
of pattern recognition and the use of artificial intelligence
to find groups of people engaging in patterns that harm
banks, insurers, and companies. An example is also given of
the use of these techniques to allocate resources efficiently
to find problems before they occur
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