Article ID: | iaor2014444 |
Volume: | 65 |
Issue: | 3 |
Start Page Number: | 408 |
End Page Number: | 415 |
Publication Date: | Mar 2014 |
Journal: | Journal of the Operational Research Society |
Authors: | Hand David J, Adams Niall M |
Keywords: | credit scoring, portfolio selection |
Selection bias is a perennial problem when constructing and evaluating scorecards. It is familiar in the context of reject inference, but crops up in many other situations as well. In this paper, we examine the impact of how accepting or rejecting customers using one scorecard leads to biased comparisons of performance between that scorecard and others. This has important implications for organisations seeking to improve or replace scorecards.