Classification Models Via Tabu Search: An Application to Early Stage Venture Classification

Thomas Astebro, Canan Akdemir and Samir Elhedhli
Additional contact information
Canan Akdemir : University of Waterloo, Postal: 200 University Ave W, Waterloo, ON N2L 3G1, Canada
Samir Elhedhli : University of Waterloo, Postal: 200 University Ave W, Waterloo, ON N2L 3G1, Canada

No 1097, HEC Research Papers Series from HEC Paris

Abstract: We model the decision making process used by experts at the Canadian Innovation Centre to classify early stage venture proposals based on potential commercial success. The decision is based on thirty seven attributes that take values in (-1; 0; 1). We adopt a conjunctive decision framework due to Astebro and Elhedhli that selects a subset of attributes and determines two threshold values: one for the maximum allowed negatives (n) and one for minimum required positives (p). A proposal is classified as a success if the number of positives is greater than or equal to p and the number of negatives is less than or equal to n over the selected attributes. Based on data of 561 observations, the selection of attributes and the determination of the threshold values is modeled as a large-scale mixed integer program. Two solution approaches are explored: Benders decomposition and Tabu search. The first was very slow to converge, while the second provided high quality solutions quickly. Tabu Search provides excellent classification accuracy for predicting commercial successes as well as replicating the experts' forecasts, opening the venue for the use of Tabu Search in scoring and classification problems.

Keywords: tabu search; large-scale mixed integer program; classification; decision heuristic; early stage venture forecast (search for similar items in EconPapers)
JEL-codes: C45 C53 C63 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2015-10-21
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2636835 (application/pdf)

Related works:
Working Paper: Classification Models Via Tabu Search: An Application to Early Stage Venture Classification (2015)
Working Paper: Classification models via Tabu search: An application to early stage venture classification (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1097

Access Statistics for this paper

More papers in HEC Research Papers Series from HEC Paris HEC Paris, 78351 Jouy-en-Josas cedex, France. Contact information at EDIRC.
Bibliographic data for series maintained by Antoine Haldemann ().