Threshold From a Confusion Matrix
Use confusion matrix counts and error costs to choose between two classification thresholds.
Threshold 0.50 gives FP=20 and FN=30. Threshold 0.30 gives FP=55 and FN=10. A false positive costs 1 review unit. A false negative costs 5 fraud-loss units. Threshold choice = confusion matrix counts x error costs, checked against operational capacity. Accuracy can prefer the threshold with fewer total mistakes while hiding that the expensive mistake is still too frequent. Cost at threshold 0.50 FP cost = 201 = 20. FN cost = 305 = 150. Total = 170. The false negatives dominate because missed fraud is expensive. Cost at threshold 0.30 FP cost = 551 = 55. FN cost = 105…
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