Abstract:Understanding the dynamics of financial transactions among people is critically important for various applications such as fraud detection. One important aspect of financial transaction networks is temporality. The order and repetition of transactions can offer new insights when considered within the graph structure. Temporal motifs, defined as a set of nodes that interact with each other in a short time period, are a promising tool in this context. In this work, we study three unique temporal financial networks: transactions in Mercari, an online marketplace, payments in a synthetic network generated by J.P. Morgan Chase, and payments and friendships among Venmo users. We consider the fraud detection problem on the Mercari and J.P. Morgan Chase networks, for which the ground truth is available. We show that temporal motifs offer superior performance than a previous method that considers simple graph features. For the Venmo network, we investigate the interplay between financial and social relations on three tasks: friendship prediction, vendor identification, and analysis of temporal cycles. For friendship prediction, temporal motifs yield better results than general heuristics, such as Jaccard and Adamic-Adar measures. We are also able to identify vendors with high accuracy and observe interesting patterns in rare motifs, like temporal cycles. We believe that the analysis, datasets, and lessons from this work will be beneficial for future research on financial transaction networks.
Abstract:Inverse Ising inference allows pairwise interactions of complex binary systems to be reconstructed from empirical correlations. Typical estimators used for this inference, such as Pseudo-likelihood maximization (PLM), are biased. Using the Sherrington-Kirkpatrick (SK) model as a benchmark, we show that these biases are large in critical regimes close to phase boundaries, and may alter the qualitative interpretation of the inferred model. In particular, we show that the small-sample bias causes models inferred through PLM to appear closer-to-criticality than one would expect from the data. Data-driven methods to correct this bias are explored and applied to a functional magnetic resonance imaging (fMRI) dataset from neuroscience. Our results indicate that additional care should be taken when attributing criticality to real-world datasets.