Consider Figure 5.15, the decile lift chart for the transaction data model, applied to new data.

a. Interpret the meaning of the first and second bars from the left.

b. Explain how you might use this information in practice.

c. Another analyst comments that you could improve the accuracy of the model by classifying everything as non-fraudulent. If you do that, what is the error rate?

d. Comment on the usefulness, in this situation, of these two metrics of model performance (error rate and lift).

Transcribed Image Text:

Target 100% 95% Cumulative Coverage of fraudulent 95% Correct in Confidence Segment 98% 98% 99% 99% 99% ON 100N 90% 85% 81% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 14% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Population %