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This is a form of categorical regression in which the dependent variable is a categorical variable, e.g., Good or Bad.
Basic idea:
Given values of various characteristics of an object, predict its category, e.g.,
Is a prospective customer a good credit risk, or bad?
Is a paper banknote good or counterfeit?
Does a patient have a certain disease or not?
We compute the weights in a scoring formula, so that Score(i) >= 0 implies a good item, < 0 implies bad.
There are various objectives one can use in finding an optimal scoring function. Here we use the objective of Minimize the number of misclassifications;