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Watch the video series: https://salford-systems.wistia.com/medias/khutf815bh
A question we hear time and again is "how does your data mining software determine the best model?" In order to shed some light on this, a well as provide an in-depth analysis for those who want to take it a step farther, we have created a detailed video analysis of how the 'best model' is chosen. The simple answer is: it depends.
What are cost functions?
Cost functions (a.k.a loss functions) are a way to help the data modeler solve a supervised learning problem, either classification or regression. The 'fit' of the response surface on the data available will associate a cost of the event that occurs. In an optimization example, you would want to minimize your cost.