Teacher Supervision, Fixed Representations and Calibration: Exact Risk Calculations for Candidate-Scoring Decision Models

By Agus Sudjianto, Denis Burakov

Rating

1862
Battle Count: 50

Relevance

6/10
While focused on credit decisions, the insights on model calibration, teacher bias, and the limitations of calibration diagnostics are highly relevant for quantitative trading models that rely on probability estimates for signal generation and risk management.

Implementation Complexity

7/10
The theoretical derivations are complex (inverse Wishart, probit integrals), but the empirical application involves standard ML pipelines (TF-IDF, LoRA fine-tuning, logistic regression) and public datasets.

Reproducibility

3/5
The paper provides code (experiments.py, cfpb directory) and uses public data (CFPB Consumer Complaint Database). Simulation parameters are fully specified. Capped at 3/5 by Everscope: the paper links no public code repository.

Abstract

Candidate-scoring decision models return a probability distribution over a presented set of answers. Public documentation of one such system, Jev, and of an open counterpart, JevAny, describes three training ingredients that determine what these probabilities estimate: soft targets from larger models, a frozen pretrained backbone and temperature calibration. We analyze each ingredient in Gaussian surrogates where the finite-sample risk can be computed exactly. A student trained on teacher targets inherits the teacher's bias, which more student data does not remove and agreement with the teacher does not reveal. A fixed representation lowers the risk only below an explicit sample-size threshold. In a probit model the exact recalibration map is a temperature scaling, which removes all excess risk only when the teacher's coefficient has the correct direction and otherwise leaves a residual that calibration diagnostics do not detect. Under Luce's choice axiom, candidate scores are coherent across refinements of an event if and only if they aggregate by log-sum-exp. On 231,521 credit card complaints from the Consumer Financial Protection Bureau, where the decision is whether a complaint ends in monetary relief, a student trained on a logistic teacher's probabilities ends at the teacher's decision cost while a student trained on outcomes goes 8% below it, a 30B model read zero-shot remains worse than the teacher after recalibration, and that model departs from the coherence condition by 17.5 decibans. Pretrained representations reduce the labeled data required and calibration corrects the scale of the probabilities, but neither corrects a biased teacher, so the probabilities have to be checked against realized outcomes.

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