Actuarial Notes

Linkage

Study guide: Exam MAS-II

Linkage is the rule that turns a dissimilarity between observations into a dissimilarity between clusters, so that Hierarchical Clustering can decide which pair of clusters to fuse next.

\text{complete: } \max_{i \in A,\, j \in B} d_{ij} \qquad \text{single: } \min_{i \in A,\, j \in B} d_{ij}

\text{average: } \frac{1}{\lvert A\rvert\lvert B\rvert}\sum_{i \in A}\sum_{j \in B} d_{ij}

Linkage Cluster distance Behaviour
Complete largest pairwise compact, balanced clusters — the usual default
Single smallest pairwise chaining: long, straggly clusters, unbalanced Dendrogram
Average mean pairwise balanced, less sensitive to outliers than complete
Centroid distance between centroids can invert — a fusion below an earlier one, which makes the dendrogram unreadable
  • Complete and average linkage are preferred in practice because they give balanced, interpretable dendrograms
  • Single linkage chains: two well-separated clusters joined by a thin bridge of intermediate points will be fused, because only the nearest pair counts
  • The dissimilarity measure matters as much as the linkage — Euclidean distance groups by magnitude, correlation-based distance groups by shape regardless of magnitude
  • Variables must be standardized first whenever their units differ, or the largest-scaled variable dominates every distance

Same Data, Different Linkage Using the distances d(1,2)=2, d(1,3)=6, d(2,3)=5: at what height do clusters \{1,2\} and \{3\} fuse under complete, single and average linkage?

Answer \text{complete: } \max(6, 5) = 6 \qquad \text{single: } \min(6,5) = 5 \qquad \text{average: } \tfrac{6+5}{2} = 5.5 Same data, three different fusion heights — and with more clusters in play, potentially a different fusion order and a genuinely different clustering.