Question

You have received a security alert, and are considering two possible analysts to assign to investigate the alert. One is inexperienced, and has a salary of $50 per hour. The second is more experienced, and has a salary of $150 per hour. Both analysts will take around 1 hour to investigate. The inexperienced analyst has a higher error rate of 5% (both false positives and false negatives), while the experienced analyst has an error rate of only 2%. A false positive costs the company $1000 in additional investigation time, while a false negative costs the company $100,000 in estimated costs for missing the initial signs of the attack. True positives and negatives both have a cost of 0. Based on prior experience, the probability that the alert corresponds to a real attack is 1%. Compute the expected utility for assigning each analyst to the alert. Which should you choose if you are maximizing expected utility?

          You have received a security alert, and are considering two
possible analysts to assign to investigate the alert.  One is
inexperienced, and has a salary of $50 per hour.  The second
is more experienced, and has a salary of $150 per hour. Both
analysts will take around 1 hour to investigate. The inexperienced
analyst has a higher error rate of 5% (both false positives and
false negatives), while the experienced analyst has an error rate
of only 2%.  A false positive costs the company $1000 in
additional investigation time, while a false negative costs the
company $100,000 in estimated costs for missing the initial signs
of the attack.  True positives and negatives both have a cost
of 0.  Based on prior experience, the probability that the
alert corresponds to a real attack is 1%.  Compute the
expected utility for assigning each analyst to the alert. 
Which should you choose if you are maximizing expected utility?

Added by Lisa F.

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