A method of predicting a response relationship between elements of two sets includes: specifying a dyadic response matrix; specifying covariates that measure additional dyadic relationships; specifying a number of row clusters and a number of column clusters for clustering the rows and columns of the response matrix; specifying a rank for cluster factors that model average interactions between row clusters and column clusters by products of cluster factors; and determining prediction parameters for predicting responses between elements of the first set and the second set by improving a likelihood value that relates the prediction parameters to the response matrix, the covariates, the observation weights, the row clusters and the column clusters. Determining the prediction parameters includes: updating the prediction parameters for fixed assignments of row clusters and column clusters, and updating assignments for row clusters and column clusters for fixed prediction parameters.