The Profit Simulation
Associate a profit/cost with the positive categories (observations that belong to the population you want to target) of the Confusion Matrix.
You can visualize your profit based on the selected threshold, or automatically select the threshold based on your profit parameters.
Set the threshold that determines which values are considered positive (see the
relevant-related link) and provide the following:
- a Cost Per Predicted Positive: you define a cost per observations classified as positive by the Confusion Matrix. This covers the costs both for True Positive Target (actual positive targets that have been predicted as positive) and False Positive Target (actual negative targets that have been predicted positive).
- a Profit Per Actual Positive: you define a profit per True Positive Target (targets correctly predicted as positive) identified by the Confusion Matrix.
The Total Profit table is updated accordingly to calculate your profit/cost. You obtain an estimation of the gap between the gain of the action based on a random selection (without any predictive model) and the gain based on the selection.
To see the threshold that will give you a maximum profit for the profit parameters you have set, click Maximize Profit.