AI engineering glossary · Evaluation metrics
What is cost matrix?
Cost matrix (also called cost-sensitive evaluation): A table assigning a price to each type of outcome, such as the cost of a false positive versus a false negative. Multiplying it with the confusion matrix gives an expected cost, which lets a team choose a threshold or compare models by business impact instead of a generic score.
Cost matrix: an example
A bank estimates a missed fraud costs Rs 20,000 and a wrongly blocked payment costs Rs 500, so 5 misses and 10 false alarms cost 5 * 20,000 + 10 * 500 = Rs 1,05,000.
Related terms
More Evaluation metrics terms
- Cranfield paradigm
- Cumulative gains chart
- Davies-Bouldin index
- Diagnostic odds ratio
- Discounted cumulative gain
- Dunn index
- Error analysis
- Exact match
Where you learn it
Cost matrix is part of the AI Engineering Program, which teaches it with notes, a hands-on lab and an exam. The first lesson is free.