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A fraud ranking improvement with a worse review queue

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A fraud ranking improvement with a worse review queue

A fraud-review team evaluates a model on a properly dated holdout sample. At one threshold the confusion matrix has thirty true positives, ten false positives, twenty false negatives, and forty true negatives. A challenger has a higher ROC AUC, yet its available review queue produces less expected recovery after investigation costs. The business can inspect only a limited number of files, and potential recoveries vary substantially. A separate calibration check shows that a group assigned event probability 0.20 has forty positives among one hundred cases. The manager wants to announce the challenger as universally superior from AUC alone. The analyst must separate ranking, threshold metrics, probability calibration, constrained decision value, and uncertainty before recommending a change.

1. Compute precision, recall, and accuracy for the supplied matrix.

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Precision is 30 divided by 40, or 0.75. Recall is 30 divided by 50, or 0.60. Accuracy is 70 correct cases divided by one hundred, or 0.70. Each measure uses a different denominator and describes the specified threshold rather than all possible decisions.

2. Interpret the calibration and deployment decision.

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The probability-0.20 group has observed fraction 0.40, suggesting underprediction in that group with uncertainty to assess. Higher AUC is not a guarantee of higher net review value. Compare expected recovery, costs, capacity, appropriate calibration, and uncertainty on comparable data before a deployment recommendation.