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Markov Chains

Sergey Bryl has an introductory-level post on what Markov chains are and how they work:

Using Markov chains allow us to switch from heuristic models to probabilistic ones. We can represent every customer journey (sequence of channels/touchpoints) as a chain in a directed Markov graph where each vertex is a possible state (channel/touchpoint) and the edges represent the probability of transition between the states (including conversion.) By computing the model and estimating transition probabilities we can attribute every channel/touchpoint.

Let’s start with a simple example of the first-order or “memory-free” Markov graph for better understanding the concept. It is called “memory-free” because the probability of reaching one state depends only on the previous state visited.

Markov chains are great for behavior prediction and sentence formation.  This is part one of a series I will eagerly anticipate.  H/T R Bloggers.