I started okay with the Bayes derivation but fumbled the arithmetic partway through.
Start by stating Bayes' theorem for the posterior probability, then define Type I and Type II errors with their business implications. Finally, compute the concrete example step-by-step, emphasizing the base rate fallacy and the high false positive count relative to true positives.
Pro tip: Always highlight the base rate fallacy: with a low prior, even a highly accurate classifier can yield many false positives, so precision may be low. Discuss how adjusting the threshold or using additional signals can mitigate this in practice.
Use Bayes' theorem: P(Bad | Flagged) = (TPR * p) / (TPR * p + FPR * (1-p)). Clearly define TPR (recall) and FPR.
Type I error: false positive (flagging a good user). Type II error: false negative (missing a bad actor). Explain each in context.
Type I errors lead to user frustration, support costs, and unfair penalties. Type II errors allow bad actors to remain, risking platform integrity and user trust. Discuss the balance based on business priorities.
Calculate: 10M users, 1% bad = 100,000 bad actors. Recall 95% => 95,000 caught. FPR 2% of 9.9M good = 198,000 false positives. Total flagged = 293,000. Precision = 95,000/293,000 ≈ 32.4%.
Highlight that despite high recall, precision is low due to many false positives. Discuss potential improvements like threshold tuning, additional features, or manual review.
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