Case Study

Evaluating a loan default model with weak training performance.

Case context: A team trains a model to predict whether a loan applicant will repay on time. After training, the team estimates the model’s bias at 15% and its variance at 1%. The model misses many examples from the training data.

Question: What does this tell you about the model, and what would you expect its dev-set error to look like compared with its training error?

Sample answer: The model is best described as underfitting: it has too much bias and very little variance. Since the variance is only 1%, performance on the dev set should be only a little worse than performance on the training set.

Key points:

  • A 15% bias estimate together with 1% variance points to an overly simple model.
  • Low variance means the dev error should stay close to the training error.
  • The main problem is underfitting rather than overfitting.

Rubric: The response must identify the model as underfitting, or equivalent high-bias/low-variance behavior, and state that the dev-set error is only slightly above the training error.

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Updated 2026-08-12

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