The Cauchy-Net Mixture Model for Clustering with Anomalous Data

We live in the data explosion era. The unprecedented amount of data offers a potential wealth of knowledge but also brings about concerns regarding ethical collection and usage. Mistakes stemming from anomalous data have the potential for severe, real-world consequences, such as when building prediction models for housing prices. To combat anomalies, we develop the Cauchy-Net Mixture Model (CNMM). The CNMM is a flexible Bayesian nonparametric tool that employs a mixture between a Dirichlet Process Mixture Model (DPMM) and a Cauchy distributed component, which we call the Cauchy-Net (CN). Each portion of the model offers benefits, as the DPMM eliminates the limitation of requiring a fixed number of a components and the CN captures observations that do not belong to the well-defined components by leveraging its heavy tails. Through isolating the anomalous observations in a single component, we simultaneously identify the observations in the net as warranting further inspection and prevent them from interfering with the formation of the remaining components. The result is a framework that allows for simultaneously clustering observations and making predictions in the face of the anomalous data. We demonstrate the usefulness of the CNMM in a variety of experimental situations and apply the model for predicting housing prices in Fairfax County, Virginia.