What are "adjustable misclassification penalties"?
Unlike many data-mining tools, CART can accommodate situations in which some misclassifications, or cases that have been incorrectly classified, are more serious than others. CART users can specify a higher penalty for misclassifying certain data, and the software will steer the tree away from that type of error. Further, when CART cannot guarantee a correct classification, it will try to ensure that the error it does make is less costly. If credit risk is classified as low, moderate, or high, for example, it would be much more costly to classify a high-risk person as low-risk than as moderate-risk. Traditional data mining tools cannot distinguish between these errors.