Bagging k-dependence probabilistic networks: An alternative powerful fraud detection tool

Authors:
Francisco Louzada;Anderson Ara
Affiliations:
Universidade de São Paulo, Instituto de Matemática e Ciências da Computação, São Carlos, SP, Brazil;Universidade Federal de São Carlos, Departamento de Estatística, São Carlos, SP, Brazil
Venue:
Expert Systems with Applications: An International Journal
Year:
2012

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Abstract

Fraud is a global problem that has required more attention due to an accentuated expansion of modern technology and communication. When statistical techniques are used to detect fraud, whether a fraud detection model is accurate enough in order to provide correct classification of the case as a fraudulent or legitimate is a critical factor. In this context, the concept of bootstrap aggregating (bagging) arises. The basic idea is to generate multiple classifiers by obtaining the predicted values from the adjusted models to several replicated datasets and then combining them into a single predictive classification in order to improve the classification accuracy. In this paper, for the first time, we aim to present a pioneer study of the performance of the discrete and continuous k-dependence probabilistic networks within the context of bagging predictors classification. Via a large simulation study and various real datasets, we discovered that the probabilistic networks are a strong modeling option with high predictive capacity and with a high increment using the bagging procedure when compared to traditional techniques.