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A Survey of Explainable AI in Financial Forecasting (arxiv.org)
1 point by nickpsecurity on Nov 12, 2024 | hide | past | pdf | 1 comment on HN

In plain words: A review of five years of work on explaining AI financial forecasts sorts the approaches into categories and separates two often-mixed ideas: explaining a prediction versus building a model people can follow. It serves as a guide for choosing the right explanation for finance.

Abstract · A Survey of Explainable Artificial Intelligence (XAI) in Financial Time Series Forecasting

Artificial Intelligence (AI) models have reached a very significant level of accuracy. While their superior performance offers considerable benefits, their inherent complexity often decreases human trust, which slows their application in high-risk decision-making domains, such as finance. The field of eXplainable AI (XAI) seeks to bridge this gap, aiming to make AI models more understandable. This survey, focusing on published work from the past five years, categorizes XAI approaches that predict financial time series. In this paper, explainability and interpretability are distinguished, emphasizing the need to treat these concepts separately as they are not applied the same way in practice. Through clear definitions, a rigorous taxonomy of XAI approaches, a complementary characterization, and examples of XAI's application in the finance industry, this paper provides a comprehensive view of XAI's current role in finance. It can also serve as a guide for selecting the most appropriate XAI approach for future applications.

Pierre-Daniel Arsenault, Shengrui Wang, Jean-Marc Patenande
arXiv:2407.15909 · cs.LG, cs.AI · submitted Jul 22, 2024
abstract · pdf · html · 35 pages, This is the author's version of the work. It is posted here for your personal use. Not for redistribution. The definitive Version of Record will be published in a journal soon

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Previously, I mentioned that explainable AI might improve if modern methods were combined with fuzzy logic or decision trees. This paper has examples of hybrid models that improve explainability in that way.

The architectural principles are probably applicable to areas other than financial, time-series forecasting. I hope people experiment with them.