#decision-theory

Question 1: Single choice

A three-class model gives $p(y \mid x) = (0.5, 0.3, 0.2)$ for classes 1, 2 and 3. Predicting class 1 when the truth is class 3 costs 10; every other mistake costs 1, and a correct prediction costs 0. Which prediction minimizes the expected cost?

Class 3, with an expected cost of 0.81
Classes 1 and 2 tie, so either one is optimal2
Class 1, because it is the most probable class3
Class 2, with an expected cost of 0.74

Timed test