Decision Trees

Learn how to use the decision tree as a classification algorithm.

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Decision trees are commonly used in financial domains due to their ability to solve and explain prediction problems. They are also used as a module in other algorithms to solve more complex algorithms like bagging and boosting.

To understand the decision trees, let’s look at the problem of a car loan defaulter prediction. When we want to get a loan from the bank, they ask some questions and derive answers from our past credit history. Questions may relate to:

  • Monthly income
  • Personal information
  • Previous loans
  • Current properties

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