We propose a simple tractable pair hidden Markov model for pairwise sequence alignment that accounts for the presence of short tandem repeats. Using the framework of gain functions, we design several optimization criteria for decoding this model and describe the resulting decoding algorithms, ranging from the traditional Viterbi and posterior decoding to block-based decoding algorithms specialized for our model. We compare the accuracy of individual decoding algorithms on simulated data and find our approach superior to the classical three-state pair HMM in simulations.
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