Predicting Corporate Acquisitions: An Application of Uncertain Reasoning Using Rule Induction

Artificial Intelligence (AI)-based rule induction techniques such as IXL and ID3 are powerful tools that can be used to classify firms as acquisition candidates or not, based on financial and other data. The purpose of this paper is to develop an expert system that employs uncertainty representation and predicts acquisition targets. We outline in this paper, the features of IXL, a machine learning technique that we use to induce rules. We also discuss how uncertainty is handled by IXL and describe the use of confidence factors. Rules generated by IXL are incorporated into a prototype expert system, ACQTARGET, which evaluates corporate acquisitions. The use of confidence factors in ACQTARGET allows investors to specifically incorporate uncertainties into the decision making process. A set of training examples comprising 65 acquired and 65 non-acquired real world firms is used to generate the rules and a separate holdout sample containing 32 acquired and 32 non-acquired real world firms is used to validate the expert system results. The performance of the expert system is also compared with a conventional discriminant analysis model and a logit model using the same data. The results show that the expert system, ACQTARGET, performs as well as the statistical models and is a useful evaluation tool to classify firms into acquisition and non-acquisition target categories. This rule induction technique can be a valuable decision aid to help financial analysts and investors in their buy/sell decisions.     

RuleRS: a rule-based architecture for decision support systems

Decision-makers in governments, enterprises, businesses and agencies or individuals, typically, make decisions according to various regulations, guidelines and policies based on existing records stored in various databases, in particular, relational databases. To assist decision-makers, an expert system, encompasses interactive computer-based systems or subsystems to support the decision-making process. Typically, most expert systems are built on top of transaction systems, databases, and data models and restricted in decision-making to the analysis, processing and presenting data and information, and they do not provide support for the normative layer. This paper will provide a solution to one specific problem that arises from this situation, namely the lack of tool/mechanism to demonstrate how an expert system is well-suited for supporting decision-making activities drawn from existing records and relevant legal requirements aligned existing records stored in various databases.We present a Rule-based (pre and post) reporting systems (RuleRS) architecture, which is intended to integrate databases, in particular, relational databases, with a logic-based reasoner and rule engine to assist in decision-making or create reports according to legal norms. We argue that the resulting RuleRS provides an efficient and flexible solution to the problem at hand using defeasible inference. To this end, we have also conducted empirical evaluations of RuleRS performance.     

A structural equation modeling approach to generate explanations for induced rules

The performance of an expert system depends on the quality and validity of the domain-specific knowledge built into the system. In most cases, however, domain knowledge (e.g. stock market behavior knowledge) is unstructured and differs from one domain expert to another. So, in order to acquire domain knowledge, expert system developers often take an induction approach in which a set of general rules is constructed from past examples. Expert systems based upon the induced rules were reported to perform quite well in the hold-out sample test.

However, these systems hardly provide users with an explanation which would clarify the results of a reasoning process. For this reason, users would remain unsure about whether to accept the system conclusion or not. This paper presents an approach in which explanations about the induced rules are constructed. Our approach applies the structural equation model to the quantitative data, the qualitative format of which was originally used in rule induction. This approach was implemented with Korean stock market data to show that a plausible explanation about the induced rule can be constructed.     

A Strategy of Dynamic Reasoning in Knowledge-Based System with Fuzzy Production Rules

Fuzzy production rules have been successfully applied to represent uncertainty in a knowledge-based system. The knowledge organized as a knowledge base is static. On the other hand, a real system such as the stock market is dynamic in nature. Therefore we need a strategy to reflect the dynamic nature of a system when we make reasoning with a knowledge-based system.This paper proposes a strategy of dynamic reasoning that can be used to takes account the dynamic behavior of decision-making with the knowledge-based system consisted of fuzzy rules. A degree of match (DM) between actual input information and antecedent of a rule is represented by a value in interval [0, 1]. Weights of relative importance of attributes in a rule are obtained by the AHP (Analytic Hierarchy Process) method. Then these weights are applied as exponents for the DM, and the DMs in a rule are combined, with the Min operator, into a single DM for the rule. In this way, the importance of attributes of a rule, which can be changed from time to time, can be reflected to reasoning in knowledge-based system with fuzzy rules.With the proposed reasoning procedure, a decision maker can take his judgment on the given decision environment into a static knowledge base with fuzzy rules when he makes decision with the knowledge base. This procedure can be automated as a pre-processing system for fuzzy expert systems. Thereby the quality of decisions could be enhanced.     

Real time fuzzy scheduling rules in FMS

This paper presents a real-time fuzzy expert system to scheduling parts for a flexible manufacturing system (FMS). First, some vagueness and uncertainties in scheduling rules are indicated and then a fuzzy-logic approach is proposed to improve the system performance by considering multiple performance measures. This approach focuses on characteristics of the system's status, instead of parts, to assign priorities to the parts waiting to be processed. Secondly, a simulation model is developed and it has shown that the proposed fuzzy logic-based decision making process keeps all performance measures at a good level. The proposed approach provides a promising alternative framework in solving scheduling problems in FMSs, in contrast to traditional rules, by making use of intelligent tools.     

Bootstrapping rule induction to achieve rule stability and reduction

Most rule learning systems posit hard decision boundaries for continuous attributes and point estimates of rule accuracy, with no measures of variance, which may seem arbitrary to a domain expert. These hard boundaries/points change with small perturbations to the training data due to algorithm instability. Moreover, rule induction typically produces a large number of rules that must be filtered and interpreted by an analyst. This paper describes a method of combining rules over multiple bootstrap replications of rule induction so as to reduce the total number of rules presented to an analyst, to measure and increase the stability of the rule induction process, and to provide a measure of variance to continuous attribute decision boundaries and accuracy point estimates. A measure of similarity between rules is also introduced as a basis of multidimensional scaling to visualize rule similarity. The method was applied to perioperative data and to the UCI (University of California, Irvine) thyroid dataset. Minor Revision submitted to the Journal of Intelligent Information Systems, April 2005.     

Rough Set Theory in analyzing the attributes of combination values for the insurance market

Based on Rough Set Theory, this research addresses the effect of attributes/features on the combination values of decisions that insurance companies make to satisfy customers’ needs. Attributes impact on combination values by yielding sets with fewer objects (such as one or two objects), which increases both the lower and upper approximations. It also increases the decision rules, and degrades the precision of decisions. Our approach redefines the value set of attributes through expert knowledge by reducing the independent data set and reclassifying it. This approach is based on an empirical study. The results demonstrate that the redefined combination values of attributes can contribute to the precision of decisions in insurance marketing. Following an empirical analysis, we use a hit test that incorporates 50 validated sample data into the decision rule so that the hit rate reaches 100%. The results of the empirical study indicate that the generated decision rules can cover all new data. Consequently, we believe that the effects of attributes on combination values can be fully applied in research into insurance marketing.     

带Rough算子的决策规则及数据挖掘中的软计算

文中讨论决策规则及其与演绎推理中的假言推理规则之间的关系,通过数据挖掘中的软计算使决策表中的属性简化和性值区间化,从而找到一种具有广泛表达能力的数据隐含格式,从中选择有代表性的,并删去冗余或过剩的规则,并保持决策表的原有用途和的有性能,我们通过开发一个中医诊疗专家系统的实例说明了这种软计算的过程,并分别用于统计或专家计算带可信度因子的产生式规则和基于Ｒｏｕｇｈ集方法计算带Ｒｏｕｇｈ算子的决策规则两     

A graph-based approach for rule integrity and maintainability in expert system maintenance

Just as conventional software systems have maintenance costs far exceeding development costs, so too do rule-based expert systems. They are frequently developed by an incremental and iterative method, where knowledge and decision rules are extracted and added to the system in a piecemeal manner throughout system evolution. Thus, ensuring the correctness and consistency of the rule base (RB) becomes an important, though challenging task. However, most research work in expert systems has focused on building and validating rule bases, leaving the maintenance issue unexplored. We propose a graph-based approach, called the object classification model (OCM), as a methodology for RB maintenance. An experiment was conducted to compare the OCM with traditional RB maintenance methods. The results show that the OCM helps knowledge engineers retain rule-base integrity and, thus, increase rule-base maintainability.     

L-CATA: A logic-based expert travel system

L-CATA (Logic-based Computer Aided Travel Assistant) is a logic-based expert database system, which asks the user to input his query specification, such as starting place, destination, constraints, rules and goals, etc., and outputs a list of flights meeting the traveller's specification; together with an alternative list which may not quite meet the user's specification but optimizes his goals. L-CATA is written as a deductive database system, and uses heuristic rules to prune its search of the database. Unlike other air-travel related expert systems, L-CATA does not attempt to model the traveller. Instead, L-CATA complements existing Computer Reservation Systems by providing comprehensive individually tailored advice and information to the traveller. There are several approaches to implement such a system. The logic approach is a very promising one, and the aims of L-CATA can be more easily achieved by using it. In this paper, we present a logic approach to the L-CATA expert database system, and provide a theoretical foundation for such a database system.     

Creating Decision Trees from Rules using RBDT‐1

Most of the methods that generate decision trees for a specific problem use the examples of data instances in the decision tree–generation process. This article proposes a method called RBDT‐1—rule‐based decision tree—for learning a decision tree from a set of decision rules that cover the data instances rather than from the data instances themselves. The goal is to create on demand a short and accurate decision tree from a stable or dynamically changing set of rules. The rules could be generated by an expert, by an inductive rule learning program that induces decision rules from the examples of decision instances such as AQ‐type rule induction programs, or extracted from a tree generated by another method, such as the ID3 or C4.5. In terms of tree complexity (number of nodes and leaves in the decision tree), RBDT‐1 compares favorably with AQDT‐1 and AQDT‐2, which are methods that create decision trees from rules. RBDT‐1 also compares favorably with ID3 while it is as effective as C4.5 where both (ID3 and C4.5) are well‐known methods that generate decision trees from data examples. Experiments show that the classification accuracies of the decision trees produced by all methods under comparison are indistinguishable.     

Predicting 1-year outcome following acute myocardial infarction: physicians versus computers

Whether decision rules derived statistically from patient data can produce better decisions than an expert clinician or a model of the expert clinician (expert system) is controversial. We examined this issue in the context of predicting cardiac death by 1 year for patients discharged from the hospital following acute myocardial infarction. Decision rules were derived from a base sample of 781 patients. These decision rules and three experienced cardiologists then estimated probability of death by 1 year for each patient in a separate test sample (n = 400). In our evaluation of the performance of the decision rules and physicians, we detected no differences, although the decision rules and physicians tended to classify the patients somewhat differently. Further multivariate analyses on the physicians' predictions showed that two of the physicians paid attention to somewhat different variables than the third physician. Lack of agreement among expert cardiologists would complicate modeling of a consensual decision-making process within the framework of an expert system.     

A hybrid particle swarm optimization based fuzzy expert system for the diagnosis of coronary artery disease

This paper presents a particle swarm optimization (PSO)-based fuzzy expert system for the diagnosis of coronary artery disease (CAD). The designed system is based on the Cleveland and Hungarian Heart Disease datasets. Since the datasets consist of many input attributes, decision tree (DT) was used to unravel the attributes that contribute towards the diagnosis. The output of the DT was converted into crisp if–then rules and then transformed into fuzzy rule base. PSO was employed to tune the fuzzy membership functions (MFs). Having applied the optimized MFs, the generated fuzzy expert system has yielded 93.27% classification accuracy. The major advantage of this approach is the ability to interpret the decisions made from the created fuzzy expert system, when compared with other approaches.     

Using Rule Quality Measures for Rule Base Refinement in Knowledge-Based Predictive Maintenance Systems

Abstract

As today’s manufacturing domain is becoming more and more knowledge-intensive, knowledge-based systems (KBS) are widely applied in the predictive maintenance domain to detect and predict anomalies in machines and machine components. Within a KBS, decision rules are a comprehensive and interpretable tool for classification and knowledge discovery from data. However, when the decision rules incorporated in a KBS are extracted from heterogeneous sources, they may suffer from several rule quality issues, which weakens the performance of a KBS. To address this issue, in this paper, we propose a rule base refinement approach with considering rule quality measures. The proposed approach is based on a rule integration method for integrating the expert rules and the rules obtained from data mining. Within the integration process, rule accuracy, coverage, redundancy, conflict, and subsumption are the quality measures that we use to refine the rule base. A case study on a real-world data set shows the approach in detail.     

The IKBALS project: Multi-modal reasoning in legal knowledge based systems

In attempting to build intelligent litigation support tools, we have moved beyond first generation, production rule legal expert systems. Our work integrates rule based and case based reasoning with intelligent information retrieval.When using the case based reasoning methodology, or in our case the specialisation of case based retrieval, we need to be aware of how to retrieve relevant experience. Our research, in the legal domain, specifies an approach to the retrieval problem which relies heavily on an extended object oriented/rule based system architecture that is supplemented with causal background information. We use a distributed agent architecture to help support the reasoning process of lawyers.Our approach to integrating rule based reasoning, case based reasoning and case based retrieval is contrasted to the CABARET and PROLEXS architectures which rely on a centralised blackboard architecture. We discuss in detail how our various cooperating agents interact, and provide examples of the system at work. The IKBALS system uses a specialised induction algorithm to induce rules from cases. These rules are then used as indices during the case based retrieval process.Because we aim to build legal support tools which can be modified to suit various domains rather than single purpose legal expert systems, we focus on principles behind developing legal knowledge based systems. The original domain chosen was theAccident Compensation Act 1989 (Victoria, Australia), which relates to the provision of benefits for employees injured at work. For various reasons, which are indicated in the paper, we changed our domain to that ofCredit Act 1984 (Victoria, Australia). This Act regulates the provision of loans by financial institutions.The rule based part of our system which provides advice on the Credit Act has been commercially developed in conjunction with a legal firm. We indicate how this work has lead to the development of a methodology for constructing rule based legal knowledge based systems. We explain the process of integrating this existing commercial rule based system with the case base reasoning and retrieval architecture.     

Automatic fuzzy-rule assessment and its application to the modelling of nitrogen leaching for large regions

 Diffuse nutrient emissions from agricultural land is one of the major sources of pollution for ground water, rivers and coastal waters. The quantification of pollutant loads requires mathematical modelling of water and nutrient cycles. The deterministic simulation of nitrogen dynamics, represented by complicated highly non-linear processes, requires the application of detailed models with many parameters and large associated data bases. The operation of those models within integrated assessment tools or decision support systems for large regions is often not feasible. Fuzzy rule based modelling provides a fast, transparent and parameter parsimonious alternative. Besides, it allows regionalisation and integration of results from different models and measurements at a higher generalised level and enables explicit consideration of expert knowledge. In this paper an algorithm for the assessment of fuzzy rules for fuzzy modelling using simulated annealing is presented. The fuzzy rule system is applied to simulate nitrogen leaching for selected agricultural soils within the 23687 km² Saale River Basin. The fuzzy rules are defined and calibrated using results from simulation experiments carried out with the deterministic modelling system SWIM. Monthly aggregated time series of simulated water balance components (e.g. percolation and evapotranspiration), fertilization amounts, resulting nitrogen leaching and crop parameters are used for the derivation of the fuzzy rules. The 30-year simulation period was divided into 20 years for training and 10 years for validation, with the latter taken from the middle part of the period. Three specific fuzzy rule systems were created from the simulation experiments, one for each selected soil profile. Each rule system includes 15 rules as well as one prescribed rules from expert knowledge and 7 input variables. The performance of the fuzzy rule system is satisfactory for the assessment of nitrate leaching on annual to long term time steps. The approach allows rapid scenario analysis for large regions and has the potential to become part of decision support systems for generalised integrated assessment of water and nutrients in macroscale regions.     

A self-evaluating expert system for X-ray rocking curve analysis

X-ray rocking curve analysis is widely used in research and industry to investigate the perfection of a variety of natural and synthetic crystals. In this article a method is demonstrated for the effective self-evaluation of an expert system for x-ray rocking curve analysis. the method uses a combination of fuzzy logic and machine learning, the latter defined as a self-adaptive system that improves system performance over time. the heuristics of several experts are combined using rules, frames, and connection matrices. Each expert is weighted on the basis of experience and these credibility weights are used to influence the decision processes of the expert system. All weights are evaluated over time and the basis for evaluation is successful or unsuccessful expert system decisions. Individual rules are also evaluated and whenever a rule is shown to be ineffective it is hidden from the reasoning processes of the expert system. When new situations occur that have not been allowed for in the rules of the expert system, then existing rules are fine-tuned and changed to deal with these new facts. New rules are inferred and evaluated in the same way as the heuristics of the human experts. © 1994 John Wiley & Sons, Inc.     

Some applications of fuzzy logic in rule–based expert systems

Fuzzy logic has been used as a means of interpreting vague, incomplete and even contradictory information into a compromised rule base in artificial intelligence such as machine decision–making. Within this context, fuzzy logic can be applied in the field of expert systems to provide additional flexibilities in constructing a working rule base: different experts' opinions can be incorporated into the same rule base, and each opinion can be modeled in a rather vague notion of human language. As some illustrative application examples, this paper describes how fuzzy logic can be used in expert systems. More precisely, it demonstrates the following applications: (i) a healthcare diagnostic system, (ii) an autofocus camera lens system and (iii) a financial decision system. For each application, basic rules are described, the calculation method is outlined and numerical simulation is provided. These applications demonstrate the suitability and performance of fuzzy logic in expert systems.