Carleton Loss

Carleton Loss is a method used to evaluate how well a model predicts probabilities of different outcomes, especially in financial contexts. It compares the predicted probabilities to actual results, penalizing larger errors more heavily. Designed to assess decision-making based on uncertain information, it helps determine if the model's probability estimates are reliable. This loss function provides a nuanced way to measure predictive accuracy by considering both the correctness of the prediction and the confidence level, ultimately guiding improvements in risk assessment and decision processes.