An organization uses a spam filtering software to block email messages that may

Question

An organization uses a spam filtering software to block email messages that may potentially be spam messages. The spam filter can be set to one of two security modes: High-Security-Mode () or Low-Security-Mode ().

Extensive evaluation using a benchmark corpus consisting exclusively ofspammessages yields the following performance statistics for the spam filter:

96% of the spam messages are blocked in the High-Security-Mode.

90% of the spam messages are blocked in the Low-Security-Mode.

Extensive evaluation using a benchmark corpus consisting exclusively of non-spam(legitimate) messages yields the following performance statistics for the spam filter:

10% of the non-spam messages are blocked in the High-Security-Mode

4% of the non-spam messages are blocked in the Low-Security-Mode

The organization estimates that 80% of the messages that it receives arespammessages.

* If the cost of not blocking a spam message is $1 and the cost of blocking a non-spam message is $10, should the organization operate the spam filter in the High-Security-Mode? Why?

* Recall that the cost of not blocking a spam message is $1. At least how high should the cost of blocking a non-spam message be for a risk-neutral rational decision maker to prefer operating the spam filter in the Low-Security-Mode?

* Let be the amortized cost per message of operating the spam filter. Write a short memo the CIO of the organization explaining at most how high could be for the organization to use the spam filter with the specified performance?

Explanation / Answer

An organization uses a spam filtering software to block email messages that may

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