This book, together with specially prepared online material freely accessible to our readers, provides a complete introduction to Machine Learning, the technology that enables computational systems to adaptively improve their performance with experience accumulated from the observed data. Such techniques are widely applied in engineering, science, finance, and commerce. This book is designed for a short course on machine learning. It is a short course, not a hurried course. From over a decade of teaching this material, we have distilled what we believe to be the core topics that every student of the subject should know.

Monotonicity is a constraint which arises in many application domains. We present a machine learning model, the monotonic network, for which monotonicity can be enforced exactly, i.e., by virtue offunctional form. A straightforward method for implementing and training a monotonic network is described. Monotonic networks are proven to be universal approximators of continuous, differentiable monotonic functions. We apply monotonic networks to a real-world task in corporate bond rating prediction and compare them to other approaches. 1 Introduction Several recent papers in machine learning have emphasized the importance of priors and domain-specific knowledge. In their well-known presentation of the biasvariance tradeoff (Geman and Bienenstock, 1992)' Geman and Bienenstock conclude by arguing that the crucial issue in learning is the determination of the "right biases" which constrain the model in the appropriate way given the task at hand.

Monotonicity is a constraint which arises in many application domains. We present a machine learning model, the monotonic network, for which monotonicity can be enforced exactly, i.e., by virtue offunctional form. A straightforward method for implementing and training a monotonic network is described. Monotonic networks are proven to be universal approximators of continuous, differentiable monotonic functions. We apply monotonic networks to a real-world task in corporate bond rating prediction and compare them to other approaches. 1 Introduction Several recent papers in machine learning have emphasized the importance of priors and domain-specific knowledge. In their well-known presentation of the biasvariance tradeoff (Geman and Bienenstock, 1992)' Geman and Bienenstock conclude by arguing that the crucial issue in learning is the determination of the "right biases" which constrain the model in the appropriate way given the task at hand.

Monotonicity is a constraint which arises in many application domains. Wepresent a machine learning model, the monotonic network, for which monotonicity can be enforced exactly, i.e., by virtue offunctional form. A straightforward method for implementing and training a monotonic network is described. Monotonic networks are proven to be universal approximators of continuous, differentiable monotonicfunctions. We apply monotonic networks to a real-world task in corporate bond rating prediction and compare them to other approaches. 1 Introduction Several recent papers in machine learning have emphasized the importance of priors anddomain-specific knowledge. In their well-known presentation of the biasvariance tradeoff(Geman and Bienenstock, 1992)' Geman and Bienenstock conclude by arguing that the crucial issue in learning is the determination of the "right biases" whichconstrain the model in the appropriate way given the task at hand.

In financial market applications, it is typical to have limited amount of relevant training data, with high noise levels in the data. The information content of such data is modest, and while the learning process can try to make the most of what it has, it cannot create new information on its own. This poses a fundamental limitation on the 412 Yaser S. Abu-Mostafa

In financial market applications, it is typical to have limited amount of relevant training data, with high noise levels in the data. The information content of such data is modest, and while the learning process can try to make the most of what it has, it cannot create new information on its own. This poses a fundamental limitation on the 412 Yaser S. Abu-Mostafa

In financial market applications, it is typical to have limited amount of relevant training data, with high noise levels in the data. The information content of such data is modest, and while the learning process can try to make the most of what it has, it cannot create new information on its own. This poses a fundamental limitation on the 412 YaserS.

We address the problem of learning an unknown function by pu tting together several pieces of information (hints) that we know about the function. We introduce a method that generalizes learning from examples to learning from hints. A canonical representation of hints is defined and illustrated for new types of hints. All the hints are represented to the learning process by examples, and examples of the function are treated on equal footing with the rest of the hints. During learning, examples from different hints are selected for processing according to a given schedule. We present two types of schedules; fixed schedules that specify the relative emphasis of each hint, and adaptive schedules that are based on how well each hint has been learned so far. Our learning method is compatible with any descent technique that we may choose to use.

We address the problem of learning an unknown function by pu tting together several pieces of information (hints) that we know about the function. We introduce a method that generalizes learning from examples to learning from hints. A canonical representation of hints is defined and illustrated for new types of hints. All the hints are represented to the learning process by examples, and examples of the function are treated on equal footing with the rest of the hints. During learning, examples from different hints are selected for processing according to a given schedule. We present two types of schedules; fixed schedules that specify the relative emphasis of each hint, and adaptive schedules that are based on how well each hint has been learned so far. Our learning method is compatible with any descent technique that we may choose to use.

We address the problem of learning an unknown function by pu tting together several pieces of information (hints) that we know about the function. We introduce a method that generalizes learning fromexamples to learning from hints. A canonical representation ofhints is defined and illustrated for new types of hints. All the hints are represented to the learning process by examples, and examples of the function are treated on equal footing with the rest of the hints. During learning, examples from different hints are selected for processing according to a given schedule. We present two types of schedules; fixed schedules that specify the relative emphasis ofeach hint, and adaptive schedules that are based on how well each hint has been learned so far. Our learning method is compatible with any descent technique that we may choose to use.