Research in machine learning, statistics and related fields has produced a wide variety of algorithms for classification. However, most of these algorithms assume that all errors have the same cost, which is seldom the case in KDD prob- lems. Individually making each classification learner costsensitive is laborious, and often non-trivial. In this paper we propose a principled method for making an arbitrary classifier cost-sensitive by wrapping a cost-minimizing procedure around it. This procedure, called MetaCost, treats the underlying classifier as a black box, requiring no knowledge of its functioning or change to it. Unlike stratification, MetaCost is applicable to any number of classes and to arbitrary cost matrices. Empirical trials on a large suite of benchmark databases show that MetaCost almost always produces large cost reductions compared to the cost-blind classifier used (C4.5RULES) and to two forms of stratification. Further tests identify the key components of MetaCost and those that can be varied without substantial loss. Experiments on a larger database indicate that MetaCost scales well.

Many real-world data sets exhibit skewed class distributions in which almost all cases are allotted to a class and far fewer cases to a smaller, usually more interesting class. A classifier induced from an imbalanced data set has, typically, a low error rate for the majority class and an unacceptable error rate for the minority class. This paper firstly provides a systematic study on the various methodologies that have tried to handle this problem. Finally, it presents an experimental study of these methodologies with a proposed mixture of expert agents and it concludes that such a framework can be a more effective solution to the problem. Our method seems to allow improved identification of difficult small classes in predictive analysis, while keeping the classification ability of the other classes in an acceptable level.

For a long time, classification algorithms have focused on minimizing the quantity of prediction errors by assuming that each possible error has identical consequences. However, in many real-world situations, this assumption is not convenient. For instance, in a medical diagnosis domain, misdiagnosing a sick patient as healthy is much more serious than its opposite. For this reason, there is a great need for new classification methods that can handle asymmetric cost and benefit constraints of classifications. In this thesis, we discuss cost-sensitive classification concepts and propose a new classification algorithm called Benefit Maximization with Feature Intervals (BMFI) that uses the feature projection based knowledge representation. In the framework of BMFI, we introduce five different voting methods that are shown to be effective over different domains. A number of generalization and pruning methodologies based on benefits of classification are implemented and experimented. Empirical evaluation of the methods has shown that BMFI exhibits promising performance results compared to recent wrapper cost-sensitive algorithms, despite the fact that classifier performance is highly dependent on the benefit constraints and class distributions in the domain. In order to evaluate costsensitive classification techniques, we describe a new metric, namely benefit accuracy which computes the relative accuracy of the total benefit obtained with respect to the maximum possible benefit achievable in the domain.