The Traditional Approach: Gross Scoring

Model building and scoring as a statistical methodology have been known for decades, and there is a wide variety of literature available for studies. Instead of giving a complete introduction into model building and scoring techniques, it is the intention of this chapter to explain the main predictive modeling techniques from an angle which allows the reader to understand the change in paradigm that comes with the transition from classical scores to net scores. At first, the problem to be solved is explained and formalized. The second section introduces common methods for scoring, like decision trees or (logistic) regression, always with the generalization to net scoring in mind. The third section contains an introduction to well-known quality measures for scoring models. Although the facts presented in this chapter may be known to many readers, it is nevertheless recommended to study this chapter in order to get familiar with the way scoring methods are presented and described in this book.