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Secure coprocessors have traditionally been used as a keystone of a security subsystem, eliminating the need to protect the rest of the subsystem with physical security measures. With technological advances and hardware miniaturization they have become increasingly powerful. This opens up the possibility of using them for non traditional use. This paper describes a solution for privacy preserving data sharing and mining using cryptographically secure but resource limited coprocessors. It uses memory light data mining methodologies along with a light weight database engine with federation capability, running on a coprocessor. The data to be shared resides with the enterprises that want to collaborate. This system will allow multiple enterprises, which are generally not allowed to share data, to do so solely for the purpose of detecting particular types of anomalies and for generating alerts. We also present results from experiments which demonstrate the value of such collaborations.

The issues of cross channel integration and customer life time value modeling are two of the most important topics surrounding customer relationship management (CRM) today. In the present paper, we describe and evaluate a novel solution that treats these two important issues in a unified framework of Markov Decision Processes (MDP). In particular, we report on the results of a joint project between IBM Research and Saks Fifth Avenue to investigate the applicability of this technology to real world problems. The business problem we use as a testbed for our evaluation is that of optimizing direct mail campaign mailings for maximization of profits in the store channel. We identify a problem common to cross-channel CRM, which we call the Cross-Channel Challenge, due to the lack of explicit linking between the marketing actions taken in one channel and the customer responses obtained in another. We provide a solution for this problem based on old and new techniques in reinforcement learning. Our in-laboratory experimental evaluation using actual customer interaction data show that as much as 7 to 8 per cent increase in the store profits can be expected, by employing a mailing policy automatically generated by our methodology. These results confirm that our approach is valid in dealing with the cross channel CRM scenarios in the real world.

We empirically evaluate the performance of various reinforcement learning methods in applications to sequential targeted marketing. In particular we propose and evaluate a progression of reinforcement learning methods, ranging from the "direct" or "batch" methods to "indirect" or "simulation based" methods, and those that we call "semidirect" methods that fall between them. We conduct a number of controlled experiments to evaluate the performance of these competing methods. Our results indicate that while the indirect methods can perform better in a situation in which nearly perfect modeling is possible, under the more realistic situations in which the system's modeling parameters have restricted attention, the indirect methods' performance tend to degrade. We also show that semi-direct methods are effective in reducing the amount of computation necessary to attain a given level of performance, and often result in more profitable policies.

Fingerhut Business Intelligence (BI) has a long and successful history of building statistical models to predict consumer behavior. The models constructed are typically segmentation-based models in which the target audience is split into subpopulations (i.e., customer segments) and individually tailored statistical models are then developed for each segment. Such models are commonly employed in the direct-mail industry; however, segmentation is often performed on an ad-hoc basis without directly considering how segmentation affects the accuracy of the resulting segment models. Fingerhut BI approached IBM Research with the problem of how to build segmentation-based models more effectively so as to maximize predictive accuracy. The IBM Advanced Targeted Marketing-Single EventsTM (IBM ATM-SETM) solution is the result of IBM Research and Fingerhut BI directing their efforts jointly towards solving this problem. This paper presents an evaluation of ATM-SE's modeling capabilities using data from Fingerhut's catalog mailings.

Classi cation modeling (a.k.a.supervised learning) is an extremely useful analytical technique for developing predictive and forecasting applications.The explosive growth in data warehousing and internet usage has made large amounts of data potentially available for developing classi cation models.For example, natural language text is widely available in many forms (e.g., electronic mail, news articles, reports, and web page contents).Categorization of data is a common activity which can be automated to a large extent using supervised learning methods.Examples of this include routing of electronic mail, satellite image classi cation, and character recognition.However, these tasks require labeled data sets of suciently high quality with adequate instances for training the predictive models.Much of the on-line data, particularly the unstructured variety (e.g., text), is unlabeled.Labeling is usually a expensive manual process done by domain experts.Active learning is an approach to solving this problem and works by i d e n tifying a subset of the data that needs to be labeled and uses this subset to generate classi cation models.We present an active learning method that uses adaptive resampling in a natural way t o signi cantly reduce the size of the required labeled set and generates a classi cation model that achieves the high accuracies possible with current adaptive resampling methods.

In some classification problems the feature space is heterogeneous in that the best features on which to base the classification are different in different parts of the feature space. In some other problems the classes can be divided into subsets such that distinguishing one subset of classes from another and classifying examples within the subsets require very different decision rules, involving different sets of features. In such heterogeneous problems, many modeling techniques (including decision trees, rules, and neural networks) evaluate the performance of alternative decision rules by averaging over the entire problem space, and are prone to generating a model that is suboptimal in any of the regions or subproblems. Better overall models can be obtained by splitting the problem appropriately and modeling each subproblem separately. This paper presents a new measure to determine the degree of dissimilarity between the decision surfaces of two given problems, and suggests a way to search for a strategic splitting of the feature space that identifies regions with different characteristics. We illustrate the concept using a multiplexor problem, and apply the method to a DNA classification problem.

We describe the results of extensive experiments using optimized rule-based induction methods on large document collections. The goal of these methods is to discover automatically classification patterns that can be used for general document categorization or personalized filtering of free text. Previous reports indicate that human-engineered rule-based systems, requiring many man-years of developmental efforts, have been successfully built to “read” documents and assign topics to them. We show that machine-generated decision rules appear comparable to human performance, while using the identical rule-based representation. In comparison with other machine-learning techniques, results on a key benchmark from the Reuters collection show a large gain in performance, from a previously reported 67% recall/precision breakeven point to 80.5%. In the context of a very high-dimensional feature space, several methodological alternatives are examined, including universal versus local dictionaries, and binary versus frequency-related features.

Expert problem-solving strategies in many domains require the use of detailed mathematical techniques coupled with experiential knowledge about how and when to use the appropriate techniques. In many of these domains, such techniques are made available to experts in large software packages. In attempting to build expert systems for these domains, we wish to make use of these packages, and are therefore faced with an important problem: how to integrate the existing software, and knowledge about its use, into a practical expert system. The expert knowledge is used, in dynamic selection and interpretation of appropriate programs and parameters, to reach a successful goal in the problem solving. We describe the framework of a hybrid expert system for representing problem-solving knowledge in these domains. This hybrid system may be characterized as consisting of a production system and mathematical methods. The software package is reorganized as necessary to map it into the mathematical-method representation of a hybrid system. This approach has evolved out of an effort to build an expert system for performing well-log analysis, ELAS (expert log analysis system).