Decision-centric fairness: Evaluation and optimization for resource allocation problems

Data-driven decision support tools play an increasingly central role in decision-making across various domains. In this work, we focus on binary classification models for predicting positive-outcome scores and deciding on resource allocation, e.g., credit scores for granting loans or churn propensity scores for targeting customers with a retention campaign. Such models may exhibit discriminatory behavior toward specific demographic groups through their predicted scores, potentially leading to unfair resource allocation. We focus on demographic parity as a fairness metric to compare the proportions of instances that are selected based on their positive outcome scores across groups. In this work, we propose a decision-centric fairness methodology that induces fairness only within the decision-making region -- the range of relevant decision thresholds on the score that may be used to decide on resource allocation -- as an alternative to a global fairness approach that seeks to enforce parity across the entire score distribution. By restricting the induction of fairness to the decision-making region, the proposed decision-centric approach avoids imposing overly restrictive constraints on the model, which may unnecessarily degrade the quality of the predicted scores. We empirically compare our approach to a global fairness approach on multiple (semi-synthetic) datasets to identify scenarios in which focusing on fairness where it truly matters, i.e., decision-centric fairness, proves beneficial.

Using dynamic loss weighting to boost improvements in forecast stability

Rolling origin forecast instability refers to variability in forecasts for a specific period induced by updating the forecast when new data points become available. Recently, an extension to the N-BEATS model for univariate time series point forecasting was proposed to include forecast stability as an additional optimization objective, next to accuracy. It was shown that more stable forecasts can be obtained without harming accuracy by minimizing a composite loss function that contains both a forecast error and a forecast instability component, with a static hyperparameter to control the impact of stability. In this paper, we empirically investigate whether further improvements in stability can be obtained without compromising accuracy by applying dynamic loss weighting algorithms, which change the loss weights during training. We show that some existing dynamic loss weighting methods achieve this objective. However, our proposed extension to the Random Weighting approach -- Task-Aware Random Weighting -- shows the best performance.

To do or not to do: cost-sensitive causal decision-making

Causal classification models are adopted across a variety of operational business processes to predict the effect of a treatment on a categorical business outcome of interest depending on the process instance characteristics. This allows optimizing operational decision-making and selecting the optimal treatment to apply in each specific instance, with the aim of maximizing the positive outcome rate. While various powerful approaches have been presented in the literature for learning causal classification models, no formal framework has been elaborated for optimal decision-making based on the estimated individual treatment effects, given the cost of the various treatments and the benefit of the potential outcomes. In this article, we therefore extend upon the expected value framework and formally introduce a cost-sensitive decision boundary for double binary causal classification, which is a linear function of the estimated individual treatment effect, the positive outcome probability and the cost and benefit parameters of the problem setting. The boundary allows causally classifying instances in the positive and negative treatment class to maximize the expected causal profit, which is introduced as the objective at hand in cost-sensitive causal classification. We introduce the expected causal profit ranker which ranks instances for maximizing the expected causal profit at each possible threshold for causally classifying instances and differs from the conventional ranking approach based on the individual treatment effect. The proposed ranking approach is experimentally evaluated on synthetic and marketing campaign data sets. The results indicate that the presented ranking method effectively outperforms the cost-insensitive ranking approach and allows boosting profitability.