Binary choice under asymmetric loss in a data‐rich environment: Theory and an application to algorithmic fairness
Abstract
We study the binary choice problem in a data‐rich environment with asymmetric loss functions. The econometrics literature covers nonparametric binary choice problems but does not offer computationally attractive solutions in data‐rich environments. The machine learning literature has many algorithms but is focused mostly on loss functions that are independent of covariates. We show that theoretically valid decisions on binary outcomes with general loss functions can be achieved via a very simple loss‐based reweighting of logistic regression or state‐of‐the‐art machine learning techniques. We apply our analysis to algorithmic fairness in pretrial detentions.
Fields of Study & Subjects
Ethics and Social Impacts of AI
Mobile Crowdsensing and Crowdsourcing
Game Theory and Voting Systems
Publication details
- Journal / source
- Quantitative Economics
- Publisher
- The Econometric Society
- Volume
- 17
- Issue
- 3
- Pages
- 623–669
- Publication date
- 1 January 2026
- Language
- EN