Response & Uplift Modeling

Predictive modeling skill for promotion targeting. Covers propensity scoring, two-model and single-model uplift, multinomial four-quadrant classification, ROI threshold optimization, and evaluation (lift chart, PR curve).

Theoretical Foundation (Katsov Ch. 3)

Response Modeling Framework (§3.4.1)

Expected campaign profit:

G(U) = Σ_{u∈U} [ Pr(R|u,T) · G(u|R) − C ]
     = Σ_{u∈U} E[G|u,T] − C

Selection rule: target customer u iff E[G|u,T] > C
ROI is maximized by finding the propensity threshold where marginal profit = 0 (§3.6.2.2).