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Simulating Repeated Significance Testing

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My colleague Mats has an excellent piece on the topic of repeated significance testing on his blog.

To demonstrate how much [repeated significance testing] matters, I’ve ran a simulation of how much impact you should expect repeat testing errors to have on your success rate.

The simulation simply runs a series of A/A conversion experiments (e.g. there is no difference in conversion between two variants being compared) and shows how many experiments ended with a significant difference, as well as how many were ever significant somewhere along the course of the experiment. To correct for wild swings at the start of the experiment (when only a few visitors have been simulated) a cutoff point (minimum sample size) is defined before which no significance testing is performed.

Although the post includes a link to the Perl code used for the simulation, I figured that for many people downloading and tweaking a script would be too much of a hassle, so I’ve ported the simulation to a simple web-based implementation.

Repeated Significance Testing Simulation Screenshot

You can tweak the variables and run your own simulation in your browser here, or fork the code yourself on Github.

Written by Lukas Vermeer

August 23, 2013 at 15:47

Restaurant Reviews and the Availability Heuristic

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You could say fine dining is a bit of a hobby of mine; and as I’ve mentioned before, I’ve composed quite a few restaurant reviews over the years. I enjoy writing about food almost as much as I love eating it.

Whilst fantasising about fancy food with a colleague the other day, we wondered whether there is any relation between the lengthiness of my reviews and the associated score. In some strange way it made intuitive sense to me that I would devote more words to describe why a particular restaurant did not live up to my expectations.

Thinking about this, the first negative review that came to my mind was one I wrote for “The Good View” in Chiang Mai, Thailand.

If service were any slower than it already is, cobwebs would certainly overrun the place. When food and drinks eventually do arrive they’re hardly worth the wait.

Fruit juice contained more sugar than a Banglamphu brothel and cocktails had less alcohol in them than a Buddhist monk. The mixed Northern specialties appetizer revealed itself to be three kinds of sausage and some raw chillies; very special indeed.

The spicy papaya salad probably tasted alright, but I was unable to tell because my taste buds were destroyed on the first bite. (Yes, I see the irony in complaining a spicy papaya salad was too spicy, but in my mind there’s a difference between spicy food and napalm.)

Also, the view is terribly overrated.

Conversely, the first positive review that popped into my brain was this rather terse piece for “Opium” in Utrecht, the Netherlands.

Om nom nom.

Judging by this tiny sample there might indeed be something to the hypothesis that review length and review score are negatively correlated. To confirm my hunch, I decided to load my reviews into R for a proper statistical analysis.

> cor.test(nn_reviews$char_count, nn_reviews$score)

Pearson's product-moment correlation
data: nn_reviews$char_count and nn_reviews$score
t = 0.2246, df = 121, p-value = 0.8227
alternative hypothesis: true correlation is not equal to 0
95 percent confidence interval:
-0.1571892 0.1967366

sample estimates:

To my surprise, the analysis shows there is practically no relation between length and score. Contrary to what the two reviews above seem to suggest I do not require more letters to describe an unpleasant dining experience as opposed to a pleasant one.

A simple plot of the two variables gives some insight into a possible cause for my misconception.

Review scores vs review length

Review scores vs review length

The outlier in the bottom right happens to represent my review for the Good View. All my other reviews are much shorter in length and seem to be quite evenly distributed over the different scores.

My misjudgement is an excellent example of the availability heuristic. The pair of examples that presented themselves to me upon initial reflection were not representative of the complete set, but that did not stop me from drawing overarching, and incorrect, conclusions based on a sample of two.

This is why I use statistics, because I am a fallible human being; just like everyone else

Written by Lukas Vermeer

March 22, 2013 at 18:11

Actionable Predictive Analytics with Oracle Data Mining

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Oracle Data Mining (ODM) provides powerful data mining functionality as native SQL functions within the Oracle Database. This Oracle By Example Tutorial gives a good overview of the GUI.

While being able to build predictive models on mountains of data without moving it out of the database is pretty cool in itself, I feel analysis without action is pretty much pointless. Tom Davenport describes this common data mining conundrum in Competing on Analytics.

Many firms are able to segment their customers and determine which ones are most profitable or which are most likely to defect. However, they are reluctant to treat different customers differently—out of tradition or egalitarianism or whatever. With such compunctions, they will have a very difficult time becoming successful analytical competitors—yet it is surprising how often companies initiate analyses without ever acting on them. The “action” stage of any analytical effort is, of course, the only one that ultimately counts.

The OBE tutorial describes a scenario in which a business wants to identify customers who are most likely to purchase insurance. Through a set of simple steps, a (decision tree) classification model is built that can be used to predict whether a particular customer is likely to purchase based on historic data.

In a classical data mining approach, the predictions of this model would be written to some OUTPUT_TABLE where they would be available for subsequent processing. Growing staler every minute—and soon forgotten when its newer sibling OUTPUT_TABLE_NEW_FINAL_2 is inevitably created—our precious business intelligence slowly withers away in a disregarded section of the database until ultimately dropped by a careless DBA.

Output tables are where analytical insight goes to die.

If all we were interested in was building models, we’d be better off glueing choo-choos. It is the new ways in which we can utilise these database resident models that makes this technology really interesting. With a few simple additional steps, this same model can be used in real-time to provide inline predictions based on up-to-date customer data; as well as for new customers.

All we need is a view and a join.

Update (October 3rd, 2012): as Marcos points out in the comments, I was making things far too complicated. No need for a separate join; simply select the output columns you need and pass everything directly to the view.

The join operations glues the original data and the prediction models together; The view allows us to look at the harmonised results directly. When a customer record is selected from the view the source data for this record is passed to the model to generate the predicted values in real-time. When source data changes so does the prediction. When new source records are added they are automatically processed in the same way.

-- Create a new customer.
1 rows inserted.
Elapsed: 00:00:00.003

-- Get prediction and probability for the new customer.
SELECT CUSTOMER_ID, insur_pred, insur_prob FROM insur_cust_ltv_prediction WHERE CUSTOMER_ID = 'CU123';
----------- ---------- ----------
CU123       No         0.7262813
Elapsed: 00:00:00.004

-- Update customer data.
UPDATE INSUR_CUST_LTV_SAMPLE SET bank_funds = 500, checking_amount = 100 WHERE CUSTOMER_ID = 'CU123';
1 rows updated.
Elapsed: 00:00:00.003

-- Get prediction and probability for the updated customer.
SELECT CUSTOMER_ID, insur_pred, insur_prob FROM insur_cust_ltv_prediction WHERE CUSTOMER_ID = 'CU123';
----------- ---------- ----------
CU123       Yes        0.6261398
Elapsed: 00:00:00.004

Seamless. Any system that can read data from an Oracle database can now utilise Oracle Data Mining models. No need to move your data. No need to build new applications.

Applications reading data from the view need never know the difference between the original source data and machine generated predictions. Oracle Business Intelligence Publisher can easily display this data in forecasting reports; or use it to power pro-active alerts. In Oracle Real-Time Decisions, rules can be built around the outcomes of these models; or predictions from multiple sources can be fed into combined likelihood models for increased accuracy.

This is huge. Trust me. Stop over-analysing and start taking action. After all, that’s the only step that ultimately counts.

Written by Lukas Vermeer

October 3, 2012 at 16:59

Posted in BI, Code, Database, Datamining, Oracle, RTD, SQL

Tagged with ,

Bin Packing Too Many Features

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Packed MotorbikeMy girlfriend has been struggling with an interesting little problem lately. She was asked to determine the optimal distribution of medicine boxes and bottles over a set of adaptable cabinets; under volume as well as weight constraints. Not an easy task for a computer scientist; much less for a hospital pharmacist in training.

After describing the problem to me last night I (unhelpfully) mumbled that “this sounds like a variable sized bin packing problem to me, you can’t solve the kind of thing in Excel, you probably need an LP solver”.

Apparently I was wrong. It already seemed obvious to me that Excel suffers from a severe case of feature bloat, but this is just absurd.

Written by Lukas Vermeer

September 19, 2012 at 17:19

Posted in Code, Mathematics

Tagged with , ,

Connecting Four in the Cloud

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CloudIt almost seems like everyone has their head in the cloud these days. And it’s not all just hot air and water vapor. Infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS) are truly revolutionizing the corporate computing industry.

That is why, for the past few months, my good friend Matt Feigal and I have been collaborating with budding startup Cloudular to bring you the next logical evolutionary step in cloud computing. Inspired by the skyward ascent of hardware, middleware and software, we are proud to bring you vaporized wetware; or “artificial intelligence as a service” (AIaaS).

I’m mostly kidding, of course, but here is something I cooked up over the weekend. A web service that plays connect four (based on an earlier post) and is looking for worthy sparring partners.

If you think you can code a better connect four algorithm (and you probably can, especially since I’ve deliberately lobotomized this particular version of my implementation), head on over to github and build your own to compete against mine. All the code and an interface description are available there. The service itself is available on Google App Engine.

I’ve got (part of) my head in the cloud, what about you?

Written by Lukas Vermeer

July 5, 2012 at 13:31

Combined Likelihood Models in Oracle Real-Time Decisions

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[ Crossposting from the Oracle Real-Time Decisions Blog. ]

In a series of posts on this blog we have already described a flexible approach to recording events, a technique to create analytical models for reporting, a method that uses the same principles to generate extremely powerful facet based predictions and a waterfall strategy that can be used to blend multiple (possibly facet based) models for increased accuracy.

This latest, and also last, addition to this sequence of increasing modeling complexity will illustrate an advanced approach to amalgamate models, taking us to a whole new level of predictive modeling and analytical insights; combination models predicting likelihoods using multiple child models.

The method described here is far from trivial. We therefore would not recommend you apply these techniques in an initial implementation of Oracle Real-Time Decisions. In most cases, basic RTD models or the approaches described before will provide more than enough predictive accuracy and analytical insight. The following is intended as an example of how more advanced models could be constructed if implementation results warrant the increased implementation and design effort. Keep implemented statistics simple!

Combined Likelihood Models

Because facet based predictions are based on metadata attributes of the choices selected, it is possible to generate such predictions for more than one attribute of a choice. We can predict the likelihood of acceptance for a particular product based on the product category (e.g. ‘toys’), as well as based on the color of the product (e.g. ‘pink’).

Of course, these two predictions may be completely different (the customer may well prefer toys, but dislike pink products) and we will have to somehow combine these two separate predictions to determine an overall likelihood of acceptance for the choice.

Perhaps the simplest way to combine multiple predicted likelihoods into one is to calculate the average (or perhaps maximum or minimum) likelihood. However, this would completely forgo the fact that some facets may have a far more pronounced effect on the overall likelihood than others (e.g. customers may consider the product category more important than its color).

We could opt for calculating some sort of weighted average, but this would require us to specify up front the relative importance of the different facets involved. This approach would also be unresponsive to changing consumer behavior in these preferences (e.g. product price bracket may become more important to consumers as a result of economic shifts).

Preferably, we would want Oracle Real-Time Decisions to learn, act upon and tell us about, the correlations between the different facet models and the overall likelihood of acceptance. This additional level of predictive modeling, where a single supermodel (no pun intended) combines the output of several (facet based) models into a single prediction, is what we call a combined likelihood model.

Facet Based Scores

As an example, we have implemented three different facet based models (as described earlier) in a simple RTD inline service. These models will allow us to generate predictions for likelihood of acceptance for each product based on three different metadata fields: Category, Price Bracket and Product Color. We will use an Analytical Scores entity to store these different scores so we can easily pass them between different functions.

A simple function, creatively named Compute Analytical Scores, will compute for each choice the different facet scores and return an Analytical Scores entity that is stored on the choice itself. For each score, a choice attribute referring to this entity is also added to be returned to the client to facilitate testing.

One Offer To Predict Them All

In order to combine the different facet based predictions into one single likelihood for each product, we will need a supermodel which can predict the likelihood of acceptance, based on the outcomes of the facet models. This model will not need to consider any of the attributes of the session, because they are already represented in the outcomes of the underlying facet models.

For the same reason, the supermodel will not need to learn separately for each product, because the specific combination of facets for this product are also already represented in the output of the underlying models. In other words, instead of learning how session attributes influence acceptance of a particular product, we will learn how the outcomes of facet based models for a particular product influence acceptance at a higher level.

We will therefore be using a single All Offers choice to represent all offers in our combined likelihood predictions. This choice has no attribute values configured, no scores and not a single eligibility rule; nor is it ever intended to be returned to a client. The All Offers choice is to be used exclusively by the Combined Likelihood Acceptance model to predict the likelihood of acceptance for all choices; based solely on the output of the facet based models defined earlier.

The Switcheroo

In Oracle Real-Time Decisions, models can only learn based on attributes stored on the session. Therefore, just before generating a combined prediction for a given choice, we will temporarily copy the facet based scores—stored on the choice earlier as an Analytical Scores entity—to the session. The code for the Predict Combined Likelihood Event function is outlined below.

// set session attribute to contain facet based scores.
// (this is the only input for the combined model)

// predict likelihood of acceptance for All Offers choice.
CombinedLikelihoodChoice c = CombinedLikelihood.getChoice("AllOffers");
Double la = CombinedLikelihoodAcceptance.getChoiceEventLikelihoods(c, "Accepted");

// clear session attribute of facet based scores.

// return likelihood.
return la;

This sleight of hand will allow the Combined Likelihood Acceptance model to predict the likelihood of acceptance for the All Offers choice using these choice specific scores. After the prediction is made, we will clear the Analytical Scores session attribute to ensure it does not pollute any of the other (facet) models.

To guarantee our combined likelihood model will learn based on the facet based scores—and is not distracted by the other session attributes—we will configure the model to exclude any other inputs, save for the instance of the Analytical Scores session attribute, on the model attributes tab.

Recording Events

In order for the combined likelihood model to learn correctly, we must ensure that the Analytical Scores session attribute is set correctly at the moment RTD records any events related to a particular choice. We apply essentially the same switching technique as before in a Record Combined Likelihood Event function.

// set session attribute to contain facet based scores
// (this is the only input for the combined model).

// record input event against All Offers choice.

// force learn at this moment using the Internal Dock entry point.

// clear session attribute of facet based scores.

In this example, Internal Learn is a special informant configured as the learn location for the combined likelihood model. The informant itself has no particular configuration and does nothing in itself; it is used only to force the model to learn at the exact instant we have set the Analytical Scores session attribute to the correct values.

Reporting Results

After running a few thousand (artificially skewed) simulated sessions on our ILS, the Decision Center reporting shows some interesting results. In this case, these results reflect perfectly the bias we ourselves had introduced in our tests. In practice, we would obviously use a wider range of customer attributes and expect to see some more unexpected outcomes.

The facetted model for categories has clearly picked up on the that fact our simulated youngsters have little interest in purchasing the one red-hot vehicle our ILS had on offer.

Also, it would seem that customer age is an excellent predictor for the acceptance of pink products.

Looking at the key drivers for the All Offers choice we can see the relative importance of the different facets to the prediction of overall likelihood.

The comparative importance of the category facet for overall prediction might, in part, be explained by the clear preference of younger customers for toys over other product types; as evident from the report on the predictiveness of customer age for offer category acceptance.


Oracle Real-Time Decisions’ flexible decisioning framework allows for the construction of exceptionally elaborate prediction models that facilitate powerful targeting, but nonetheless provide insightful reporting. Although few customers will have a direct need for such a sophisticated solution architecture, it is encouraging to see that this lies within the realm of the possible with RTD; and this with limited configuration and customization required.

There are obviously numerous other ways in which the predictive and reporting capabilities of Oracle Real-Time Decisions can be expanded upon to tailor to individual customers needs. We will not be able to elaborate on them all on this blog; and finding the right approach for any given problem is often more difficult than implementing the solution. Nevertheless, we hope that these last few posts have given you enough of an understanding of the power of the RTD framework and its models; so that you can take some of these ideas and improve upon your own strategy.

As always, if you have any questions about the above—or any Oracle Real-Time Decisions design challenges you might face—please do not hesitate to contact us; via the comments below, social media or directly at Oracle. We are completely multi-channel and would be more than glad to help. 🙂

Update (19th September, 2012): Please note that the above is intended only as an example. The implementation details shown here have been simplified so as to keep the application comprehensive enough for a single blog post. Most notably, an unhighlighted shortcut has been taken with regards to the way feedback events are recorded.

When implementing combined likelihood models in production systems, care must be taken to assure that the analytical scores used when recording feedback for a choice are exactly identical to the scores used when this particular choice was recommended. In real world applications, this will require that all scores for recommended choices are stored separately on the session for later retrieval, rather than recalculating the scores when feedback occurs (which is what the example above will do).

The method described here is far from trivial. We therefore would not recommend you apply these techniques in an initial implementation of Oracle Real-Time Decisions and that you enlist the help of experienced RTD resources to ensure the resulting implementation is correct.


Written by Lukas Vermeer

June 29, 2012 at 11:34

Posted in Java, Oracle, RTD

Tagged with , , ,

Waterfall Predictions in Oracle Real-Time Decisions

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[ Crossposting from the Oracle Real-Time Decisions Blog. ]

Facet Based Predictions are a powerful method to increase predictive accuracy and facilitate rapid learning and knowledge transfer, but the simple approach described in an earlier post comes at a price. By using a single facet rather than individual choices for prediction, we decrease the granularity of our predictions. Choices that share the same facet value will be treated as equals by our predictive model; and even when important distinctions could be made after sufficient feedback is collected our simple facet based model will never learn to exploit these differences.

In most cases, the advantages of facet based models will outweigh the drawback of a reduction in granularity. This is especially true in implementations where shelf-life is short and no individual choice is ever expected to gather enough responses to build a predictive model. However, sometimes we will want to combine the power of facet based prediction with the accuracy of models defined at the lowest level of granularity; for instance when some choices are expected to collect sufficient feedback while others are not.

The complete and open decision management framework architecture of Oracle Real-Time Decisions allows us to blend predictive models in several ways. In this post, we will describe how we can mix-and-match two models at different levels detail using an approach we call waterfall prediction.

Waterfall Prediction

In essence, the waterfall method described here will try to predict a likelihood at the lowest possible level of granularity. If the choice based model at this grade has not received enough feedback to be considered mature, we will resort to a facet based model.

This implementation will build on the example described in our previous post about facet based prediction.

Product Model Setup

In addition to the facet based category events model configured earlier we will need a choice based event model Product Events. This model will predict likelihoods of events (Accepted and Ordered) based on feedback for individual choices.

Product Model Setup

Recording Events

Previously, we would record feedback events only for our facet based model. As we now have two models at different levels of granularity, we will alter our code slightly to ensure we record any event against both models.

// create a new choice to represent the product
ProductsChoice p = Products.getChoice(request.getChoice());
// create a new choice to represent the category attribute
CategoriesChoice c = new CategoriesChoice(Categories.getPrototype());

// set properties of the category choice
c.setSDOId("Categories$" + p.getCategory());

// record choice in models (catching an exception just in case)
try { p.recordEvent(request.getEvent()); } catch (Exception e) { logError(e); }
try { c.recordEvent(request.getEvent()); } catch (Exception e) { logError(e); }

Note that we are recording the same event twice, but against two separate choices p and c representing the two different levels of granularity. The Oracle Real-Time Decisions framework will automatically ensure the relevant models are updated accordingly.

Predicting Likelihoods

In this implementation, a new function will be used to predict likelihoods for our products. Rather than just returning the likelihood at the category level like before, this function will first check whether the more granular model has received enough feedback (in this case 100 positive events) to be considered mature. If the product model is deemed sufficiently trained, the function will use this model instead of the more general facet base one.

// get instance of the model used for predicting Product Events
ProductEvents productmodel = ProductEvents.getInstance();
// get instance of the model used for predicting Category Events
CategoryEvents categorymodel = CategoryEvents.getInstance();

// check if model for Product Events is sufficiently trained
if (productmodel.getChoiceEventModelCount(ModelCount.POSITIVE_COUNT, product.getSDOId(), event) >= 100)
    // return the likelihood based on the Product Event model
    return productmodel.getChoiceEventLikelihood("Products$"+product.getSDOId(), event);
// else if the model is not sufficiently trained
else {
    // return the likelihood based on the Category Event model
    return categorymodel.getChoiceEventLikelihood("Categories$"+product.getCategory(), event);

Waterfall Function

Proper decision design and continuous in-live testing are crucial here. Precisely how much feedback should be considered “enough feedback” can wildly differ between implementations and use-cases. Moreover, some implementation might also permit the use of the quality of the models as reported by RTD, rather than the number of positive events, to determine the cascade threshold. Decision Center is an indispensable tool in this process.

Choice Group Scores Setup

Similar to before, on the scores tab for the Products choice group we configure the Likelihood performance goal to be populated by the new WaterfallLikelihood function instead of the PredictLikelihood function.

Waterfall Score

These simple changes to our previous example empower our new implementation to benefit from two models at varying levels of granularity; leveraging both the accuracy of choice based models and the advantages of facet based prediction.

The Power of Waterfall Prediction

Waterfall prediction is a compelling example of how Oracle Real-Time Decisions enables us to blend multiple real-time models for use in rapid decisioning. This advanced approach to modeling can easily be expanded to cover more than just two levels and more than one hierarchy to further improve the predictive prowess of an RTD implementation.

Cascading models allows businesses to express various forms of decision logic that are far more subtle than simple one-step prediction models. In implementations where convergence time is incompatible with business requirements – or there is a low tolerance for random behavior in the initial stages of deployment – this flexibility in designing models and decisions is crucial.

In a future post, we will discuss another approach to amalgamate models, taking us to a whole new level of predictive modeling and analytical insights; combination models predicting likelihoods using multiple child models.

Written by Lukas Vermeer

April 16, 2012 at 17:02

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