RMME/STAT Joint Colloquium
Bookmaking for Binary Outcomes: Prediction, Profits, and the IMV
Dr. Ben Domingue
Friday, February 24, at 11AM ET
Understanding the “fit” of models designed to predict binary outcomes is a long-standing problem. We propose a flexible, portable, and intuitive metric for such scenarios: the InterModel Vigorish (IMV). The IMV is based on a series of bets involving weighted coins, well-characterized physical systems with tractable probabilities. The IMV has a number of desirable properties including an interpretable and portable scale and an appropriate sensitivity to outcome prevalence. We showcase its flexibility across examples spanning the social, biomedical, and physical sciences. We demonstrate how it can be used to provide straightforward interpretation of logistic regression coefficients and to provide insights about the value of different types of item response theory (IRT) models. The IMV allows for precise answers to questions about changes in model fit in a variety of settings in a manner that will be useful for furthering research with binary outcomes.