Predicting business failure using forward ranking-order case-based reasoning

With the rapid development of business computing for Chinese listed companies, it is focused on to use case-based reasoning (CBR) in business failure prediction (BFP). Ranking-order case-based reasoning (RCBR) uses ranking-order information among cases to calculate similarity in the framework of k-nearest neighbor. RCBR is sensitive to the choice of features, meaning that optimal features can help it produce better performance. In this research, we attempt to use wrapper approach to find the optimal feature subset for RCBR in BFP. Forward feature selection method and RCBR are combined to construct a new method, namely forward RCBR (FRCBR). The combination is implemented by combining forward feature selection with RCBR as a wrapper module. Hold out method is used to assessing the performance of the classifier. Empirical data were collected from Chinese listed companies in the Shenzhen Stock Exchange and Shanghai Stock Exchange. We employed the standalone RCBR, the classical CBR with Euclidean metric as its heart, the inductive CBR, the two statistical methods of logistic regression and multivariate discriminate analysis (MDA), and support vector machines to make comparisons. For comparative methods, stepwise MDA was employed to select optimal feature subset. Empirical results indicated that FRCBR can produce dominating performance in short-term BFP of Chinese listed companies.     

Learning fuzzy rules for similarity assessment in case-based reasoning

Fundamental to case-based reasoning is the assumption that similar problems have similar solutions. The meaning of the concept of “similarity” can vary in different situations and remains an issue. This paper proposes a novel similarity model consisting of fuzzy rules to represent the semantics and evaluation criteria for similarity. We believe that fuzzy if-then rules present a more powerful and flexible means to capture domain knowledge for utility oriented similarity modeling than traditional similarity measures based on feature weighting. Fuzzy rule-based reasoning is utilized as a case matching mechanism to determine whether and to which extent a known case in the case library is similar to a given problem in query. Further, we explain that such fuzzy rules for similarity assessment can be learned from the case library using genetic algorithms. The key to this is pair-wise comparisons of cases with known solutions in the case library such that sufficient training samples can be derived for genetic-based fuzzy rule learning. The evaluations conducted have shown the superiority of the proposed method in similarity modeling over traditional schemes as well as the feasibility of learning fuzzy similarity rules from a rather small case base while still yielding competent system performance.     

Predicting business failure using multiple case-based reasoning combined with support vector machine

Financial distress prediction of business institutions is a long cherished topic concentrating on reducing loss of the society. Case-based reasoning (CBR) is an easily understandable methodology for problem solving. Support vector machine (SVM) is a new technology developed recently with high classification performance. Combining-classifiers system is capable of taking advantages of various single techniques to produce high performance. In this research, we develop a new combining-classifiers system for financial distress prediction, where four independent CBR systems with k-nearest neighbor (KNN) algorithms are employed as classifiers to be combined, and SVM is utilized as the algorithm fulfilling combining-classifiers. The new combining-classifiers system is named as Multiple CBR systems by SVM (Multi-CBR–SVM). The four CBR systems, respectively, are found on similarity measure on the basis of Euclidean distance metric, Manhattan distance metric, Grey coefficient metric, and Outranking relation metric. Outputs of independent CBRs are transferred as inputs of SVM to carry out combination. How to implement the combining-classifiers system with collected data is illustrated in detail. In the experiment, 83 pairs of sample companies in health and distress from Shanghai and Shenzhen Stock Exchange were collected, the technique of grid-search was utilized to get optimal parameters, leave-one-out cross-validation (LOO-CV) was used as assessment in parameter optimization, and predictive performances on 30-times hold-out data were used to make comparisons among Multi-CBR–SVM, its components and statistical models. Empirical results have indicated that Multi-CBR–SVM is feasible and validated for listed companies’ business failure prediction in China.     

Decision-theoretic case-based reasoning

We describe a decision-theoretic methodology for case-based reasoning in diagnosis and troubleshooting applications. The system utilizes a special-structure Bayesian network to represent diagnostic cases, with nodes representing issues, causes, and symptoms. Dirichlet distributions are assessed at knowledge acquisition time to indicate the strength of relationships between variables. During a diagnosis session, a relevant subnetwork is extracted from a Bayesian-network database that describes a very large number of diagnostic interactions and cases. The constructed network is used to make recommendations regarding possible repairs and additional observations, based on an estimate of expected repair costs. As cases are resolved, observations of issues, causes, symptoms, and the success of repairs are recorded. New variables are added to the database, and the probabilities associated with variables already in the database are updated. In this way, the inferential behavior of system adjusts to the characteristics of the target population of users. We show how these elements work together in a cycle of troubleshooting tasks, and describe some results from a pilot system implementation and deployment     

Continuous case-based reasoning

Case-based reasoning systems have traditionally been used to perform high-level reasoning in problem domains that can be adequately described using discrete, symbolic representations. However, many real-world problem domains, such as autonomous robotic navigation, are better characterized using continuous representations. Such problem domains also require continuous performance, such as on-line sensorimotor interaction with the environment, and continuous adaptation and learning during the performance task. This article introduces a new method for continuous case-based reasoning, and discusses its application to the dynamic selection, modification, and acquisition of robot behaviors in an autonomous navigation system, SINS (self-improving navigation system). The computer program and the underlying method are systematically evaluated through statistical analysis of results from several empirical studies. The article concludes with a general discussion of case-based reasoning issues addressed by this research.     

From case-based reasoning to traces-based reasoning

CBR is an original AI paradigm based on the adaptation of solutions of past problems in order to solve new similar problems. Hence, a case is a problem with its solution and cases are stored in a case library. The reasoning process follows a cycle that facilitates “learning” from new solved cases. This approach can be also viewed as a lazy learning method when applied for task classification. CBR is applied for various tasks as design, planning, diagnosis, information retrieval, etc. The paper is the occasion to go a step further in reusing past unstructured experience, by considering traces of computer use as experience knowledge containers for situation based problem solving.     

Complementary case-based reasoning and competitive fuzzy cognitive maps for advanced medical decisions

This paper presents a new hybrid modeling methodology suitable for complex decision making processes. It extends previous work on competitive fuzzy cognitive maps for medical decision support systems by complementing them with case based reasoning methods. The synergy of these methodologies is accomplished by a new proposed algorithm that leads to more dependable advanced medical decision support systems that are suitable to handle situations where the decisions are not clearly distinct. The methodology developed here is applied successfully to model and test two decision support systems, one a differential diagnosis problem from the speech pathology area for the diagnosis of language impairments and the other for decision making choices in external beam radiation therapy.     

An introduction to case-based reasoning

Case-based reasoning means using old experiences to understand and solve new problems. In case-based reasoning, a reasoner remembers a previous situation similar to the current one and uses that to solve the new problem. Case-based reasoning can mean adapting old solutions to meet new demands; using old cases to explain new situations; using old cases to critique new solutions; or reasoning from precedents to interpret a new situation (much like lawyers do) or create an equitable solution to a new problem (much like labor mediators do). This paper discusses the processes involved in case-based reasoning and the tasks for which case-based reasoning is useful.This article is excerpted from Case-Based Reasoning by Janet Kolodner, to be published by Morgan-Kaufmann Publishers, Inc. in 1992.This work was partially funded by darpa under Contract No. F49620-88-C-0058 monitored by AFOSR, by NSF under Grant No. IST-8608362, and by ARI under Contract No. MDA-903-86-C-173.     

Short term stock selection with case-based reasoning technique

Stock selection is an important decision making problem. Trading strategies and rules based on fundamental and technical analysis can be used for decision making process. In this paper, we propose an intelligent stock selection method, which is called case-based reasoning (CBR). This technique uses the fundamental and technical indicators to identify the winning stocks around the earning announcements. CBR method is compared with other artificial intelligence techniques such as multi layer perceptron (MLP), decision trees (QUEST, Classification and Regression Trees, C5), generalized rule induction (GRI) and logistic regression. We show that the performance of CBR is better than the performance of other techniques in terms of classification accuracy, average return, Sharpe ratio and ideal profit.     

Artefact generation in second life with case-based reasoning

Launched in 2003, Second Life is a computer-based pseudo-environment accessed via the Internet. Although a number of individuals and companies have developed a presence (lands) in Second Life, there is no appropriate methodology in place for undertaking such developments. While some existing methods have been adapted by users to their individual needs, this paper explores the development of a method for developing lands specifically within Second Life. This method is based on case-based reasoning (CBR) as this method has a number of similarities with Second Life itself. A system was designed based on CBR with some modifications to work in accordance with Second Life. In this paper, the system and its modifications are discussed and its application to the development of space within Second Life is evaluated. From tracking its progress against previous specifications and future activity, an updated version of the CBR web tool component covering the latest changes and improvements in the tool is introduced here.     

A hybrid model combining case-based reasoning and fuzzy decision tree for medical data classification

In this research, a hybrid model is developed by integrating a case-based data clustering method and a fuzzy decision tree for medical data classification. Two datasets from UCI Machine Learning Repository, i.e., liver disorders dataset and Breast Cancer Wisconsin (Diagnosis), are employed for benchmark test. Initially a case-based clustering method is applied to preprocess the dataset thus a more homogeneous data within each cluster will be attainted. A fuzzy decision tree is then applied to the data in each cluster and genetic algorithms (GAs) are further applied to construct a decision-making system based on the selected features and diseases identified. Finally, a set of fuzzy decision rules is generated for each cluster. As a result, the FDT model can accurately react to the test data by the inductions derived from the case-based fuzzy decision tree. The average forecasting accuracy for breast cancer of CBFDT model is 98.4% and for liver disorders is 81.6%. The accuracy of the hybrid model is the highest among those models compared. The hybrid model can produce accurate but also comprehensible decision rules that could potentially help medical doctors to extract effective conclusions in medical diagnosis.     

混合案例推理和规则推理的集成推理框架

在智能决策系统（IDSS）获取知识的推理体系中，案例推理和规则推理有着各自的优点，而混合两者的集成推理可以克服两者的缺点，提高系统的效率和综合推理能力。但是集成推理系统缺乏通用性，延长了开发周期，且不利于规则库和案例库的重用。一种可扩充的集成推理框架为了解决上面的问题而被提出，该框架利用智能决策支持语言Knonit的组件性，对不同的集成方式可方便地扩充相应的集成推理方案，从而快速地搭建IDSS应用；同时规则和案例是作为Knonit广义知识元存在，可以在集成推理框架中复用，另一方面，Knonit的动态特性和可扩充性也对案例库和知识库动态的调整和扩充提供了支持。     

Robotic inspection plan optimizationby case-based reasoning

Inspection planning is discussed in a framework where a rich choice of instruments is available and robots can also participate in the inspection process. The problem of constrained plan optimization is exposed, and a solution is suggested that is based on task grouping. After outlining the overall planning process, we give details of the optimization stage where case-based reasoning is applied. Finally, it will be shown how the implemented knowledge-based system can operate as a knowledge server.     

Synergistic case-based reasoning in medical domains

This paper presents four synergistic systems that exemplify the approaches and benefits of case-based reasoning in medical domains. It then explores how these systems couple Artificial Intelligence (AI) research with medical research and practice, integrate multiple AI and computing methodologies, leverage small numbers of available cases, reason with time series data, and integrate numeric data with contextual and subjective information. The following systems are presented: (1) CARE-PARTNER, which supports the long-term follow-up care of stem-cell transplantation patients; (2) the 4 Diabetes Support System, which aids in managing patients with type 1 diabetes on insulin pump therapy; (3) Retrieval of HEmodialysis in NEphrological Disorders, which supports hemodialysis treatment of patients with end stage renal disease; and (4) the Mälardalen Stress System, which aids in the diagnosis and treatment of stress-related disorders.     

Financial market monitoring by case-based reasoning

This paper shows that case-based reasoning (CBR), an artificial intelligence technique, is a quite efficient tool in monitoring financial market against its possible collapse. For this purpose, daily financial condition indicator (DFCI) monitoring financial market is built on CBR and its performance is compared to DFCI on neural network. This study is empirically done for the Korean financial market.     

Scale-guided object matching for case-based reasoning

Case-Based Reasoning (CBR) can be seen as a problem-solving paradigm that advocates the use of previous experiences to limit search spaces and to reduce opportunities for error repetition. In this paradigm, the case at hand is compared against former experiences to select from a set of possible courses of action the best one. A comparison method is required to ensure that the most resembling experience is, in fact, chosen to drive the problem-solving process. This paper discusses an object-oriented framework that provides a scale-guided measure of similarity between objects, and shows how this framework can be applied for case-based reasoning, drawing examples from device diagnosis.     

Integrating case-based and fuzzy reasoning to qualitatively predict risk in an environmental impact assessment review

During the preparation of environmental impact statements (EIS) and environmental impact assessment reports (EIAR) for a development proposal, developers have three concerns. First is acquiring similar proposals for reference. Second is to forecast a possible review result for a compiled EIS or EIAR: approval, conditional approval, second-stage EIA, or disapproval. Risk management in accordance with the possible review result is the third issue. With the predicted possible review result, early preparation and revision of environmental management plans can ameliorate in advance highly risky nuisances; thereby the probability of passing review is relatively enhanced. In response to the first concern, Taiwan EPA provides developers an information system to access EISs and EIARs through the Internet. Except that, there is no related system to address these concerns in Taiwan. In this paper, the following suggestions of using artificial intelligence and management science are proposed to assist developers: case-based reasoning (CBR) for retrieval of similar cases, fuzzy reasoning (FR) for qualitative risk forecast, and importance–performance analysis (IPA) for risk management. Finally, a case study is used to demonstrate the use of the proposed system.     

Hierarchical case-based reasoning integrating case-based anddecompositional problem-solving techniques for plant-control softwaredesign

Case based reasoning (CBR) is an artificial intelligence technique that emphasises the role of past experience during future problem solving. New problems are solved by retrieving and adapting the solutions to similar problems, solutions that have been stored and indexed for future reuse as cases in a case-base. The power of CBR is severely curtailed if problem solving is limited to the retrieval and adaptation of a single case, so most CBR systems dealing with complex problem solving tasks have to use multiple cases. The paper describes and evaluates the technique of hierarchical case based reasoning, which allows complex problems to be solved by reusing multiple cases at various levels of abstraction. The technique is described in the context of Deja Vu, a CBR system aimed at automating plant-control software design