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Cost Function
We can measure the accuracy of our hypothesis function by using a cost function. This
takes an average di erence (actually a fancier version of an average) of all the results of
the hypothesis with inputs from x's and the actual output y's.

m m
1 2
1 2
J (θ0 , θ1 ) = ^ −y )
∑ (y = ∑ (hθ (xi ) − y i )
i i
2m 2m
i=1 i=1

To break it apart, it is 1

2
x̄ where x̄ is the mean of the squares of hθ (xi ) − yi , or the
di erence between the predicted value and the actual value.

This function is otherwise called the "Squared error function", or "Mean squared error".
The mean is halved ( 12 ) as a convenience for the computation of the gradient descent, as

the derivative term of the square function will cancel out the term. The following image
1

summarizes what the cost function does:

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